ISSUE 011022 – THE ENTERPRISE’S LEGAL REPRESENTATIVE

Dear Valued Clients,

1.     The definition

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, act as the plaintiff, defendant or person with relevant interests and duties before in court, arbitration and other rights and obligations prescribed by law[1].

2.      Persons who can act as the enterprise’s legal representative

Article 137 Civil Code No. 91/2015/QH13 of the National Assembly dated November 24, 2015 stipulated that the following persons may act as company legal representative:

(i)      The person appointed by the juridical person according to its charter;

(ii)     The person competent to represent as prescribed by law;

(iii)     The person appointed by a court during the proceedings at the court.

In accordance to the law, in case Single-member Limited Liability Company owned by an organization, the company shall have at least one legal representative who holds the title of President of the Board of Members, the company’s President or Director/General Director. Unless otherwise prescribed by the company’s charter, the President of the company or President of the Board of Members shall be the company’s legal representative[2].

For Two-member Limited Liability Company, the company shall have at least one legal representative who holds the title of President of the Board of Members, Director/General Director. Unless otherwise prescribed by the company’s charter, the President of the Board of Members shall be the company’s legal representative[3].

For Joint Stock Companies (“SJC”), if the company has only one legal representative, the President of the Board of Directors or the Director/General Director shall be the legal representative. The President of the Board of Directors shall be the company’s legal representative unless otherwise prescribed by the company’s charter. If the company has more than one legal representative, the President of the Board of Directors and the Director/General Director shall be the company’s legal representatives[4].

For partnerships, general partners are the partnership’s legal representative[5]. Different from the above types of businesses, the sole proprietorship’s owner is its legal representative[6].

3.     The number of the enterprise’s legal representative

A Limited Liability Company (“LLC”) and JSC 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[7].

4.     Cases that the enterprise’s legal representative does not reside in Vietnam

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[8].

In case the authorizing person has not returned to Vietnam when the letter of authorization mentioned expires and does not have any further actions[9]:

(i)     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;

(ii)    In case the enterprise is a LLC, JSC 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.

5.      Special case

For the Two-member Limited Liability Company, if the member who act as the 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[10].

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 above cases[11].

6.      Responsibilities of the enterprise’s legal representative.

 An enterprise’s legal representative shall[12]:

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

(ii)     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;

(iii)    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 the Law on Enterprise.

The enterprise’s legal representative shall be personally responsible for any damage to the enterprise due to a breach of the aforesaid responsibilities.

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

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

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[1] Article 12.1 of the Law on Enterprise 2020.

[2] Article  79.3 of the Law on Enterprise 2020.

[3] Article  54.3 of the Law on Enterprise 2020.

[4] Article  137.2 of the Law on Enterprise 2020.

[5] Article  184.1 of the Law on Enterprise 2020.

[6] Article  190.3 of the Law on Enterprise 2020.

[7] Article 12.2 of the Law on Enterprise 2020.

[8] Article 12.3 of the Law on Enterprise 2020.

[9] Article 12.4 of the Law on Enterprise 2020.

[10] Article 12.6 of the Law on Enterprise 2020.

[11] Article 12.6 of the Law on Enterprise 2020.

[12] Article 13 of the Law on Enterprise 2020.