The importance of company’s Legal Representative

Under the laws of Vietnam on enterprise, a legal representative of an enterprise plays an important role in the company operation because civil transactions entered into and performed with third parties by the legal representative in accordance with his/her scope of authority shall bind and give rise to the rights and obligations of the enterprise.

The legal representative of an enterprise is the individual that exercises the rights and fulfills the obligations under transactions of the enterprise, represents on behalf of the enterprise as the plaintiff, defendant, and person with relevant interests and duties before the arbitral tribunal, the court, exercises other rights and fulfills other obligations as prescribed by law.

A limited liability company or joint-stock company may have one or multiple legal representatives. The quantity, titles, rights and obligations of legal representative of the enterprise shall be specified in the company’s charter. Since the law does not specify that an individual can be the legal representative of only one enterprise, such individual can be the legal representative of multiple enterprises provided that there is no conflict in interest among those enterprises.

There must always be at least one legal representative that resides in Vietnam. If the enterprise has only one legal representative, such person must resides in Vietnam and authorizes another individual in writing to perform the legal representative’s right and obligations when leaving Vietnam. In this case, the legal representative is still responsible for the performance of authorized rights and obligations.

In case the legal representative does not return to Vietnam at the end of authorization period and does not give another authorization:

  • The authorized person of sole proprietorship shall keep performing the legal representative’s rights and obligations within the scope of authorization until the legal representative goes back to work at the enterprise;
  • The authorized person of limited liability company, joint-stock company, or partnership shall keep performing the legal representative’s rights and obligations within the scope of authorization until the legal representative goes back to work at the enterprise, or until the company’s owner, the Board of Members, or the Board of Directors decides to designate another person as the legal representative of the enterprise.

If the enterprise has only one legal representative and such person is not present in Vietnam for more than 30 days without authorizing another person to perform the rights and obligations of the legal representative, or such person is dead, missing, detained, sentenced to imprisonment, or legally incompetent, the company owner, the Board of Members, or the Board of Directors shall then designate another person as the legal representative.

With regard to a limited liability company with two members, if the member who is the legal representative of the company is detained or sentenced to imprisonment, makes a getaway, is missing or legally incompetent, or is deprived of the right to practice by the court for committing smuggling, counterfeiting, running illegal businesses, tax evasion, fraud, or another crime defined by Criminal Code, the other member is naturally the company’s legal representative until the Board of Members makes a decision on the company’s legal representative.

In some special cases, the Court is entitled to appoint the legal representative only for and during the proceedings.

Normally, the legal representative of an enterprise has the following responsibilities:

  • Perform the given rights and obligations in a truthful, careful manner to ensure the enterprise’s lawful interests;
  • Act in the best interest of the enterprise; do not use information, know-how, business opportunities of the enterprise; do not abuse the position, power, or property of the enterprise for self-seeking purposes or serving the interest of other entities;
  • Notify the enterprise of the representative and his/her related persons owning or having the controlling shares or contribution capital in other enterprises.

If above responsibilities are violated, the legal representative is personally responsible for the damage caused by his/her violations.

To conclude, there is a long way starting from business establishment of foreign investors in Vietnam. At the beginning of the journey, Vietnam Visa Easy is always here, being willing and ready to give our clients some peace of mind with our high-quality and trustable assistance in threshold requirements for long-term visa business visa, work permit, permanent resident card, etc.

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