ISSUE 010123 – AUTHORIZED REPRESENTATIVES OF THE OWNER, MEMBERS, PARTNERS, SHAREHOLDERS OF THE COMPANY THAT ARE ORGANIZATIONS

Dear Valued Clients,

The authorized representative of the owner, members or shareholders of the company that are organizations who, through a written authorization, exercise the rights and obligations within the scope of authorization, is a person that acts on behalf of and for the benefit of the owner, members or shareholders to establish, and perform transactions.

In this Legal Article, the issues on the authorized representatives of the owner, members and shareholders as organizations of the company prescribed in the Law on Enterprises No. 59/2020/QH14 of the National Assembly dated June 17, 2020 (“the Law on Enterprises 2020”) shall be summarized and clarified for your kind reference and consideration.

1.      Definition

Authorized representatives of the owner, members, and shareholders as organizations shall be individuals who are authorized in writing on behalf of such owner, members or shareholders to perform the rights and obligations as prescribed by the Law on Enterprises 2020[1].

 2.    Standards of the authorized representatives of the owner, members, and shareholders as organizations

The authorized representative(s) shall satisfy the following standards and conditions[2]:

a)     The authorized representative(s) is not a subject specified in Clause 2 Article 17 of the Law on Enterprises 2020;

b)     Members, and shareholders of state-owned enterprises prescribed in Point b Clause 1 Article 88 of the Law on Enterprises 2020 shall not designate a relative of the executive and the person with the power to designate the executive as the representative of another company;

c)     Other standards and conditions specified in the company’s Charter.

3.     Number of the authorized representatives of the owner, members, and shareholders that are organizations

Unless prescribed otherwise in the Charter, the designation of the authorized representative(s) shall comply with the following legislations[3]:

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

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

In case the owner, members, shareholders designate more than one authorized representative, the holding, number of shares represented by each of them shall be specified. Otherwise, the total holding, number of shares shall be equally divided among the authorized representatives[4].

Note: The document designating the authorized representative shall be notified to the company, only become effective on the date it is received by the company and contain the following information[5]:

a)      Names, enterprise identification (EID) numbers, head offices’ addresses of the owner, members, shareholders;

b)      The number of authorized representatives and their holdings;

c)      Full name, contact address, nationality, and legal document number of each authorized representative;

d)     The corresponding authorization period of each authorized representative; in which the beginning date of authorization is clearly stated;

e)     Full names and signatures of the legal representatives of the owner, members, shareholders and of the authorized representatives.

4.      Responsibilities of the authorized representatives of the owner, members, shareholders as organizations

The responsibilities of authorized representatives of the owner, members, shareholders that are organizations shall be specified as follows[6]:

a)     Authorized representatives on behalf of the owner, members, shareholders shall exercise and perform the rights and obligations of the aforementioned subjects at the Board of Members, General Meeting of Shareholders in accordance with the Law on Enterprises 2020. All limits imposed by the owner, members, shareholders to the authorized representatives’ performance of the corresponding rights and obligations at the Board of Members, General Meeting of Shareholders shall not apply to any third party.

b)     Authorized representatives shall have the responsibility to attend all meetings of the Board of Members, General Meeting of Shareholders; to exercise and perform the authorized rights and obligations in an honest and prudent manner to protect the legitimate interests of the owner, members, shareholders that designated them;

c)     Authorized representatives shall be responsible to the owner, members, shareholders for the violation(s) of the responsibilities specified in Article 15 of the Law on Enterprises 2020. The owner, members, shareholders designating the authorized representatives shall be responsible to the third party(s) for the arising liabilities relating to the performance of the rights and obligations of these authorized representative.

As always, we hope you find this Legal Article useful and look forward to working with you in the future.

Kind regards,

ENT Law LLC

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[1] Article 14.1 of the Law on Enterprises 2020.

[2] Article 14.5 of the Law on Enterprises 2020.

[3] Article 14.2 of the Law on Enterprises 2020.

[4] Article 14.3 of the Law on Enterprises 2020.

[5] Article 14.4 of the Law on Enterprises 2020.

[6] Article 15 of the Law on Enterprises 2020.