Every company in Vietnam must have at least one legal representative (LR). LR is an individual who represents a company to exercise the rights and perform the obligations arising from transactions of the company, represents the company acting as a requester for settlement of civil cases, plaintiff, defendant or person with related interests or obligations before Arbitration or Court, and has other rights and obligations as prescribed by laws. As such, any documents, agreements, and so forth of the company must be duly executed by the LR or legally authorized person to be valid and/or accepted by the competent authorities.

LR is very important to the existence and growth of a company.

The title of Legal Representative in a company

For a limited liability company with two or more members

A company must have at least one LR who holds the title of chairperson of the members’ council or director or general director. In case it is not specified in the company charter, the chairperson of the members’ council is the LR of the company.

For a single-member limited liability company

A company must have at least one LR who holds one of the titles of chairperson of the members’ council, president or director or general director. In case it is not specified in the company charter, the chairperson of the members’ council or president of the company is the LR of the company.

For a joint stock company

In case the company has only one LR, the chairperson of the board of directors or director or general director shall be the LR of the company. In case it is not specified in the company charter, the chairperson of the board of directors is the LR of the company. In case the company has more than one LR, the chairperson of the board of directors and director or general director must be one of the LRs of the company.

For a partnership

General partners are LRs and shall operate day-to-day business operations of the partnership.

Rights and obligations of Legal Representative in the company

LR has three main obligations under 2020 Law on Enterprises, including:

  • The obligation to exercise and perform the assigned rights and obligations in an honest, prudent and in the best manner in order to guarantee the lawful interests of the company;
  • The obligation to be loyal to the interests of the company; neither to abuse his/her title or position nor to use business information, know-how or business opportunities or other assets of the company for personal gain or for the interests of other organizations or individuals; and
  • The obligation in timely, fully and accurately notify the company about the other companies which he/she or his/her related party owns or in which he/she or his/her related party has shareholding or contributed capital in accordance with laws on enterprise.

In addition, when the LR undertakes the titles of the company’s manager (such as Chairperson of the members’ council/ President of the Company/ Director/ General Director), the LR shall also be bound by the provisions on obligations and responsibilities for those titles according to 2020 Law on Enterprises.

The company shall ensure that it has at least one LR residing in Vietnam all the time. In case it has only one LR residing in Vietnam, when such person leaves Vietnam, he/she shall authorize in writing to another person residing in Vietnam to exercise the rights and perform the obligations of the LR. In this case, the LR is still responsible for the exercise and performance of the authorized rights and obligations.

Specifically, 2020 Law on Enterprise allows limited liability companies and joint stock companies to have one or more than one LR. The company charter must specify the number and managerial titles, and rights and obligations of the LR of the company. If the company has more than one LR, the company charter must specify the rights and obligations of each LR. In case the division of rights and obligations among LRs is not specified in the company charter, each LR may act as a fully competent representative of the company before a third party; all LRs shall bear joint responsibility for damage caused to the company in accordance with the civil laws and other relevant laws.

Notable points for Legal Representative of company

First, in addition to the general regulations on the responsibilities and obligations of the LR, the company should specifically provide the rights, obligations, and responsibilities for the title of LR under the company charter. In case the company has two or more LR, the company charter must clearly regulate the rights, responsibilities, and obligations of each LR to facilitate the implementation in practice and as well as avoid further arising disputes.

Second, because the LR is the person representing the company to exercise rights and obligations arising from any transaction of the company, the company needs to build a strictly internal compliance system. For instance, contracts, documents, etc. which submission to the LR for execution must be reviewed and confirmed in advance by relevant departments of the company (for example, the sales contract needs to be reviewed by the sales department, the finance department, and the legal department before submitting to the legal representative for execution); or the company has a Letter of Delegation for LR to authorize key personnel to execute or perform some transactions on behalf of the company, etc.

Third, the company should note that some documents, transactions, and so forth executed by the LR must be agreed and/or approved by the relevant bodies provided under 2020 Law on Enterprise and the company charter. For example, for the limited liability company with two or more members, contracts, transactions between the company and members, authorized representatives of members, directors or general director, LR of the company, etc. must be approved by the Board of Members; the person to sign contracts or transactions on behalf of the company must notify the members of Board of Members and the controller of the related subjects and related interests for such contracts or transactions; together with the draft contract or the main content of the transaction intended to be executed.

*****

If you have any questions or concerns about the legal representative of the company or other managers of the company, our experienced corporate attorneys are always available at letran@corporatecounsels.vn