Who is the legal representative of the enterprise under Viet Nam Law on Enterprises?

The enterprise’s legal representative is the person on behalf of the enterprise to perform certain activities derived from the enterprise’s transactions. Viet Nam Law on enterprises has regulations on the enterprise’s legal representative. Let’s find out with Lawyer X through the following scenario: “Dear Lawyer! Enterprises in Vietnam are specified into 4 main types of enterprises. I want to ask about how to determine legal representatives of enterprises under Vietnamese law. Is there any difference in determining legal representatives of 4 main types of enterprises? Thanks for your answer!”

Legal grounds

Law on Enterprises

What does the enterprise’s legal representative mean?

– The enterprise’s legal representative is the person that, on behalf of the enterprise, exercises and performs the rights and obligations derived from the enterprise’s transactions, acts as the plaintiff, defendant or person with relevant interests and duties before in court, arbitration, and performs other rights and obligations prescribed by law.

– A limited liability company or joint stock company may have one or more than one legal representative. The enterprise’s charter shall specify the quantity, position, rights and obligations of its legal representatives. In case there are more than one legal representative, the charter shall specify the rights and obligations of each of them. Otherwise, each of the legal representatives shall fully representative the enterprise and take joint responsibility for any damage to the enterprise as prescribed by civil laws and relevant laws.

– An enterprise shall have at least one legal representative residing in Vietnam. Whenever this representative leaves Vietnam, he/she has to authorize another Vietnamese resident, in writing, to act as the legal representative, in which case the authorizing person is still responsible for the authorized person’s performance.

– In case the authorizing person has not returned to Vietnam when the letter of authorization expires and does not have any further actions:

+ In case the enterprise is a sole proprietorship, the authorized person shall continue acting as the enterprise’s legal representative until the authorizing person returns;

+ In case the enterprise is a limited liability company, joint stock company or partnership, the authorized person shall continue acting as the enterprise’s legal representative until the authorizing person returns or until the enterprise’s owner, Board of Members/Partners or Board of Directors designates another legal representative.

– In case the only legal representative of an enterprise she is not present in Vietnam for more than 30 days without authorizing another person to act as the enterprise’s legal representative, or is dead, missing, facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, has difficulty controlling his/her own behaviors, is banned by the court from holding certain positions or doing certain works, the enterprise’s owner, Board of Members/Partners or Board of Directors shall appoint another legal representative, except for the cases specified in Clause 6 of Article 12 of Law on Enterprises

– In a two-member limited liability company, if the member who is the company’s legal representative is  dead, missing, facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, making getaway; has limited legal capacity or is incapacitated, has difficulty controlling his/her own behaviors, is banned by the court from holding certain positions or doing certain works, the other member shall obviously assume the position of the company’s legal representative until the Board of Members issues a new decision on the company’s legal representative.

– The court and other proceeding authorities are entitled to appoint the legal representative who participates in proceedings as prescribed by law.

Responsibilities of the enterprise’s legal representative

– An enterprise’s legal representative shall:

+ Exercise and perform his/her rights and obligations in an honest and prudent manner to protect the enterprise’s lawful interests;

+ Be loyal to the enterprise’s interests; not abuse his/her power and position or use the enterprise’s information, secrets, business opportunities and assets for personal gain or serve any other organization’s or individual’s interests;

+ Promptly and fully provide the enterprise with information about the enterprises that he/she or his/her related person owns or has shares/stakes in as prescribed in Law on Enterprises.

– The enterprise’s representative shall be personally responsible for any damage to the enterprise within the limits of responsibilities specified in Clause 1 of Article 13 of Law on Investment

Authorized representatives of the owner/members/partners/shareholders that are organizations

– Authorized representatives of the owner/members/partners/shareholders that are organizations shall be authorized in writing by the owner/members/partners/shareholders in accordance with Law on Enterprises.

– Unless otherwise prescribed by the charter, the designation of the authorized representative shall comply with the following regulations:

+ An organization that is a member of a multiple-member limited liability company and holds at least 35% of charter capital may designate up to 03 authorized representatives;

+ An organization that is a shareholder of a joint stock company and holds at least 10% of ordinary shares may designate up to 03 authorized representatives.

– In case the owner/members/partners/shareholders designate more than one authorized representative, the holding represented by each of them shall be specified. Otherwise, the total holding shall be equally divided among the authorized representatives.

– The document designating the authorized representative shall be informed to the company, be effective on the date it is received by the company and contain the following information:

+ Names, enterprise identification (EID) numbers, headquarters addresses of the owner/members/partners/shareholders;

+ Quantity of authorized representatives and their holdings;

+ Full name, mailing address, nationality, legal document number of each authorized representative;

+ The beginning date and duration of authorization of each authorized representative;

+ Full names and signatures of the legal representatives of the owner/members/partners/shareholders and of the authorized representatives.

– An authorized representative shall satisfy the following requirements:

+ The authorized representative is not an entity specified in Clause 2 Article 17 of Law on Enterprises;

+ Members/partners/shareholders of state-owned enterprises prescribed in Point b Clause 1 Article 88 of Law on Enterprises must not designate a relative of the executive and the person having the power to designate the executive as representative of another company;

+ Other requirements specified in the company’s charter.

Responsibilities of authorized representatives of the owner/members/partners/shareholders that are organizations

– Authorized representatives of the owner/members/partners/shareholders shall exercise and perform their rights and obligations in accordance with Law on Enterprises. All limits imposed by the owner/members/partners/shareholders to the authorized representatives’ performance at the Board of Members/Partners or General Meeting of Shareholders shall not apply to any third party.

– Authorized representatives have the responsibility to attend all meetings of the Board of Members/Partners or General Meeting of Shareholders; exercise and perform the authorized rights and obligations in an honest and prudent manner to protect lawful interest of the owner/members/partners/shareholders that designated them.

– Authorized representatives shall be responsible to the owner, members/partners/shareholders for fulfillment of the responsibilities specified in this Article. The owner, members/partners/shareholders that designate these authorized representatives shall be responsible to third parties for performance of these authorized representative.

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