1. Definition of Legal Representative: 

“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, acts as the plaintiff, defendant or person with relevant interests and duties before in court, arbitration, and performs other rights and obligations prescribed by law.”

The legal representative has the following basic characteristics:

• Subject: Individual
• Performs the rights and obligations arising from the enterprise’s transactions
• Represents the enterprise in litigation at the Court or Arbitration

2. Number of Legal Representatives: 

A limited liability company or joint stock company may have one or more than one legal representative. The enterprise’s charter shall specify the quantity, position, rights and obligations of legal representatives

The legal representative’s title must comply with the following regulations:

• Single-member limited liability company: The company must have at least one legal representative holding one of the following positions: Chairman of the Members’ Council, Company Chairman, or Director/General Director. If the company’s charter does not specify, the Chairman of the Members’ Council or the Company Chairman is the legal representative of the company.
• Limited liability company with two or more members: The company must have at least one legal representative holding one of the following positions: Chairman of the Members’ Council, Director, or General Director. If the company’s charter does not specify, the Chairman of the Members’ Council is the legal representative of the company.
• Joint-stock company: If the company has only one legal representative, the Chairman of the Board of Directors, the Director, or the General Director is the legal representative of the company. If the company’s charter does not specify, the Chairman of the Board of Directors is the legal representative of the company. If the company has more than one legal representative, both the Chairman of the Board of Directors and the Director or General Director are automatically considered legal representatives of the company.

3. Rights and Obligations of the Legal Representative: 

If a company has more than one legal representative, it is crucial to clearly define the rights and obligations of each representative. This should be specifically outlined in the company’s charter to avoid overlapping or conflicts during the management and operations of the company.

If the company’s charter does not clearly outline the division of rights and obligations among legal representatives, each representative is deemed to have full authority in dealings with third parties. This means that each can act on behalf of the company in transactions. Should any damages occur to the company, all legal representatives share joint liability under civil law and other applicable regulations. This provision ensures that representatives cannot escape responsibility, thereby safeguarding the company’s interests.

4. Residence Requirement for the Legal Representative: 

The enterprise must ensure that at least one legal representative resides in Vietnam. This guarantees that there is someone available to fulfill their responsibilities and exercise their authority efficiently within the country.

If the sole legal representative residing in Vietnam leaves the country, they must issue a written power of attorney to another individual residing in Vietnam to exercise their rights and obligations. This power of attorney ensures that the management and operation of the enterprise are not disrupted during the representative’s absence. However, despite the delegation of authority, the legal representative remains responsible for the execution of the delegated rights and obligations.

Clear regulations on how to handle situations where the delegation period expires and the legal representative has not returned to Vietnam are necessary. If the delegation period expires, and the legal representative has not returned to Vietnam and no new delegation is made, the following rules apply:

• The authorized person continues to exercise the rights and obligations of the legal representative of a private enterprise until the legal representative returns to the enterprise.
• The authorized person continues to exercise the rights and obligations of the legal representative of a limited liability company, joint-stock company, or partnership until the legal representative returns to the company or until the company owner, the Members’ Council, or the Board of Directors decides to appoint another legal representative for the enterprise.

Regulations concerning the legal representative in a company reflect the importance of transparent and responsible business administration. Enterprises must pay attention to establishing a clear charter to avoid a lack of clarity in the distribution of authority, as this could lead to various risks related to legal liability and business management.

Legal Basis:

• Law on Enterprise 2020
• Decree 01/2021/ND-CP on business registration

Duong Nguyen