Enterprise Law 2020: How Are Authorized Representatives of Organizations Regulated?

Law on Enterprises 2020: How is the Representative by Proxy of the Organization regulated? - Illustrative Photo.

Article 14 of the Law on Enterprises 2020 stipulates the representative by proxy of the owner, member, shareholder who is an organization, as follows:

The representative by proxy of the owner, member, or shareholder who is an organization must be an individual authorized in writing, acting on behalf of the owner, member, or shareholder to exercise rights and obligations according to this Law.

If the company's charter does not specify otherwise, the appointment of representatives by proxy follows these regulations:

- An organization that is a member of a limited liability company with two or more members, owning at least 35% of the charter capital, can authorize up to 03 representatives by proxy;

- An organization that is a shareholder of a joint-stock company, owning at least 10% of the total ordinary shares, can authorize up to 03 representatives by proxy.

In case the owner, member, or shareholder who is an organization appoints multiple representatives by proxy, the contribution portion, number of shares for each representative by proxy must be specifically determined. If not specified, the contribution portion, number of shares will be equally divided among all representatives by proxy.

The written document appointing the representative by proxy must be notified to the company and only takes effect upon the company receiving the document. This written document must include the following main contents:

- Name, enterprise code, and address of the head office of the owner, member, or shareholder;

- Number of representatives by proxy and the ownership ratio, contribution portion corresponding to each representative by proxy;

- Full name, contact address, nationality, and personal legal document number of each representative by proxy;

- The authorization period for each representative by proxy, clearly stating the start date of representation;

- Full name and signature of the legal representative of the owner, member, shareholder, and the representative by proxy.

Additionally, Clause 5, Article 14 of the Law on Enterprises 2020 stipulates the standards and conditions for a representative by proxy include:

- Not being ineligible to establish and manage enterprises in Vietnam according to the Law on Enterprises 2020;

- Members, shareholders being enterprises where the state holds over 50% of the charter capital or total voting shares are not allowed to appoint persons with familial relations to the company managers and persons authorized to appoint company managers as representatives at other companies;

Other standards and conditions as stipulated by the company's charter.

For specifics: refer to the document at Law on Enterprises 2020, effective from January 01, 2021.

Le Vy

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