Since 2021, what are the special provisions regarding the legal representative of an enterprise according to the Law on Enterprises 2020? There is important information regarding the legal representative of an enterprise.
Article table of contents
Regulations on the legal representative of the enterprise in Vietnam (Law on Enterprise 2020)
1. The legal representative of the enterprise is an individual representing the enterprise in Vietnam
According to the Law on Enterprise 2020, the legal representative of the enterprise is an individual representing the enterprise to perform:
- The rights and obligations arising from the transactions of the enterprise;
- Representing the enterprise as the petitioner in civil matters;
- Plaintiff, defendant, person with related rights and obligations before the Arbitration, Court; and
- Other rights and obligations as prescribed by law.
2. Limited liability companies and joint-stock companies may have multiple legal representatives in Vietnam
To be specific, Clause 2 Article 12 of the Law on Enterprise 2020 stipulates that limited liability companies and joint-stock companies may have more than one legal representative.
The specific number will be determined by the company's charter along with the management positions and the rights and obligations of each legal representative at the enterprise.
3. All legal representatives must be jointly liable for the damages caused to the enterprise in Vietnam
According to the provisions of the Law on Enterprise 2020, in cases where the division of rights and obligations of each legal representative is not clearly defined in the company's charter, each legal representative of the company is deemed the fully authorized representative of the enterprise before third parties.
In this situation, all legal representatives must be jointly liable for the damages caused to the enterprise in accordance with the civil law and other relevant laws.
4. The enterprise must ensure that there is always at least one legal representative residing in Vietnam
The number of legal representatives will be decided by the enterprise but must ensure that there is always at least one legal representative residing in Vietnam. This is a mandatory provision in Clause 3 Article 12 Law on Enterprise 2020.
When there is only one legal representative residing in Vietnam, this person, when exiting Vietnam, must authorize in writing another individual residing in Vietnam to perform the rights and obligations of the legal representative.
In this case, the legal representative is still liable for the exercise of the rights and obligations that have been authorized.
This is because the role of the legal representative of the enterprise is significant, representing and bearing legal responsibility before the law and partners. This regulation is to avoid situations where the legal representative of the company neglects or avoids their responsibilities.
5. Six cases where the Board of Directors may appoint someone else as the legal representative in Vietnam
The Board of Directors may appoint another person as the legal representative of the company in the following cases where the legal representative:
- Is absent from Vietnam for more than 30 days without authorizing another person to perform the rights and obligations of the legal representative of the enterprise;
- Dies, goes missing;
- Is being prosecuted, detained;
- Is serving a prison sentence, undergoing administrative treatment in compulsory detoxification centers, or compulsory education institutions;
- Is restricted or has lost civil act capacity, has difficulties in perception and behavior control;
- Is prohibited by the court from holding positions, practicing, or performing certain work.
Note: This change applies to enterprises with only one legal representative.
In the case of a limited liability company with two members, the remaining member automatically becomes the legal representative of the company until a new decision of the Members’ Council regarding the legal representative is made.
It can be seen that the enterprise cannot be without a legal representative. This is because the legal representative of the enterprise not only represents the enterprise as a party in transactions but also serves as the legal representative of the enterprise before the law.
Thuy Tram
