Do legal representatives have to take joint responsibility for any damage to the enterprise in Vietnam?

Do legal representatives have to take joint responsibility for any damage to the enterprise in Vietnam?

Pursuant to Article 12 of the Enterprise Law 2020 stipulates that the enterprise’s legal representative is as follows:

1. 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.

2. 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 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.

3. 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.

4. In case the authorizing person has not returned to Vietnam when the letter of authorization mentioned in (3) expires and does not have any further actions:

a) 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;

b) In case the enterprise is a limited liability company, joint stock company 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. 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 cases specified in Clause 6 of this Article.

6. In a two-member limited liability company, if the member who is the company’s 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.

7. The court and other proceeding authorities are entitled to appoint the legal representative who participates in proceedings as prescribed by law.

Thus, all legal representatives must be jointly responsible for damage caused to the enterprise in accordance with the provisions of the civil law in Vietnam and other relevant laws in case the distribution division of rights and obligations of each legal representative has not been clearly stated in the company's charter. Therefore, if your company has many legal representatives and each person's rights and obligations are clearly defined, all legal representatives are not jointly responsible for the damage caused by one person. 

What are responsibilities of the enterprise’s legal representative in Vietnam?

According to Article 13 of the Enterprise Law 2020, responsibilities of the enterprise’s legal representative are as follows:

1. An enterprise’s legal representative shall:

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

b) 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;

c) 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 this Law.

2. The enterprise’s representative shall be personally responsible for any damage to the enterprise within the limits of responsibilities specified in Clause 1 of this Article.

According to this Article, the enterprise’s legal representative has the responsibilities specified above in Vietnam.

Best Regards!