PROVISIONS ON LEGAL REPRESENTATIVES
Legal basic:
- The Enterprise Law 2020 takes effect from January 1st, 2021;
- Civil Code 2015 takes effect from January 01st,2017
Because the legislation does not specify the nationality requirements for legal representatives, foreigners are required to meet the same requirements as domestic traders under Law on enterprise. Client should note the following provisions:
1. The title of enterprise’s legal representative PROVISIONS ON LEGAL REPRESENTATIVES
The enterprise’s legal representative is the person that, on behalf of the enterprise, exercises and performs the rights and obligations under the provisions of current law, and who holds the title of managerial positions in the organizational structure of the enterprise.
For example:
a. Sole proprietorship: The sole proprietorship’s owner is its legal representative;
b. Limited liability company
– One-member limited liability company: President of the Board of Members, the company’s President or Director/General Director
– Two-member limited liability company: President of the Board of Members, Director or General Director
c. Joint Stock Company: The President of the Board of Directors and the Director/General Director
d. Partnerships: All the company’s general partners.
2. Standards and conditions
In case an individual is selected to be the enterprise’s legal representative, he/she must ensure the following provisions:
- Being eighteen years of age or older;
- Have full legal capacity; PROVISIONS ON LEGAL REPRESENTATIVES
- Not prohibited from establishing and managing enterprises;
- No tax code hanging on tax and business management data;
- The representative is not necessarily a capital contributor at the Enterprise.
- Confirmed permanent residence in Vietnam.
- If he/she is a foreigner, he/she has lived in Vietnam for the duration of his/her term and must have a temporary residence card as prescribed by law.
In addition, the legal representative is also selected in some specific cases:
- The person appointed by the legal entity according to the charter;
- The person authorized to represent as prescribed by law;
- The person appointed by the Court during the proceedings at the Court.
3. Quantity of representatives PROVISIONS ON 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 its legal representatives.
4. Responsibilities of the enterprise’s legal representative
Responsibilities of the enterprise’s legal representative are prescribed as follows:
- Exercise and perform his/her rights and obligations in an honest and prudent manner to protect the enterprise’s lawful interests; PROVISIONS ON LEGAL REPRESENTATIVES
- 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;
- 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.
- The enterprise’s representative shall be personally responsible for any damage to the enterprise within the limits of responsibilities
5. The presence of a legal representative
- An enterprise shall have at least one legal representative residing in Vietnam and has to authorize another Vietnamese resident, in writing, to act as the legal representative whenever this representative leaves Vietnam. In which case the authorizing person is still responsible for the authorized person’s performance.
- In case the only legal representative of an enterprise but she/he does not guarantee the exercise of its rights and obligations towards the enterprise or if she is not present in Vietnam for more than 30 days without authorizing another person to act as the enterprise’s legal representative, the enterprise’s owner, Board of Members/Partners or Board of Directors shall appoint another legal representative, in the following cases:
- Dead; PROVISIONS ON LEGAL REPRESENTATIVES
- Missing;
- Being examined for criminal liability;
- Being temporarily detained;
- Serving a prison sentence;
- Serving an administrative handling measure at compulsory detoxification facility, compulsory educational facility;
- Escaping from the residence;
- Limited or incapable of civil acts;
- Having difficulty in perceiving, controlling acts;
- Banned by court from holding positions, practicing or working certain businesses.
- 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.
The enterprise’s legal representative is one of the people who plays an important role within the enterprise and in the operation, orientation and development of the enterprise. PROVISIONS ON LEGAL REPRESENTATIVES
If you have any questions in the process of finding out about the legal representative when establishing the company, please contact businesslicense.com for detailed advice.