ISSUE 011121 – Solutions for the enterprise in case the sole legal representative is absent from Vietnam for more than 30 days

Dear Valued Clients,

The legal representative of an enterprise is an individual who represents the enterprise to exercise the rights and obligations arising from the transactions. Therefore, the long-term absence of the legal representative will strongly affect the normal operation of the enterprise. In this article, we will outline how to handle in case the legal representative is absent from Vietnam for more than 30 days.

I.  OVERVIEW OF THE LEGAL REPRESENTATIVE

The legal representative of an enterprise is an individual who represents the enterprise to exercise rights and obligations arising from transactions of the enterprise, represents the enterprise in the capacity of a requester for settlement of civil matters, plaintiffs, defendants, persons with related rights and obligations before the Arbitration, Court and other rights and obligations as prescribed by law[1].

Limited liability companies and joint stock companies may have one or more legal representatives. The company’s charter specifies the number, management titles, rights and obligations of the legal representative.

Enterprises must ensure that there is always at least one legal representative residing in Vietnam.

II. SOLUTIONS FOR THE ENTERPRISE IN CASE THE SOLE LEGAL REPRESENTATIVE IS ABSENT FROM VIETNAM FOR MORE THAN 30 DAYS

1.  The situation that the sole legal representative is absent and has authorized another individual

• If the enterprise has only one legal representative or there is only one legal representative left residing in Vietnam, this person, when exiting Vietnam, must authorize in writing another individual who resides in Vietnam to exercise the rights and obligations of the legal representative. Note that at this time, the legal representative is still responsible for the performance of the authorized rights and obligations[2].
• In case the time limit for authorization specified in Section II.(i) above expires but the legal representative of the enterprise has not returned to Vietnam and also has no other authorization, the following provisions shall apply[3]:
  • The authorized individual continues to exercise the rights and obligations of the legal representative until the legal representative returns to work;
  • The authorized individual continues to exercise the rights and obligations of the legal representative of the limited liability company, joint-stock company, partnership until the legal representative returns to work or until the owner, the Members’ Council or the Board of Management decides to appoint another individual to be the new legal representative.

2.  The situation that the sole legal representative is absent and has not authorized another individual

If an enterprise has only one legal representative and this person is absent from Vietnam for more than 30 days without authorizing another individual to exercise the rights and obligations of  the legal representative, the owner, the Members’ Council or the Board of Management appoints another individual to be the new legal representative.

Kind regards,

ENT Law LLC

The full version of this Legal Article can be found here.

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[1] Clause 1 Article 12 Law on Enterprises 2020.

[2] Clause 3 Article 12 Law on Enterprises 2020.

[3] Clause 4 Article 12 Law on Enterprises 2020.