TRADE ARTICLES

Legal representative in the enterprise

Legal Representative in the Enterprise
Legal Representative in the Enterprise

The legal representative of the enterprise is an important position in the process of establishing and operating the enterprise. Therefore, businesses and individuals need to understand the rights and obligations of this position. Our article will outline the role of the representative in the business and some issues to keep in mind.

Role of the legal representative

The legal representative of the enterprise (“Legal rep”) is the individual representing the enterprise not only to exercise on its behalf the rights and obligations arising from the transactions of the enterprise, but also as a requester for settlement of civil matters, plaintiff, defendant, the person with related interests and obligations before arbitration, court and other rights and obligations as prescribed by law.

Responsibilities of a legal representative

Legal rep has the following responsibilities:

  • Performing the assigned rights and obligations honestly, carefully, and best to ensure the legitimate interests of the enterprise.
  • Being Loyal to the interests of the enterprise; do not abuse their position and use information, know-how, business opportunities and other assets of the enterprise for personal gain or to serve the interests of other organizations or individuals.
  • Timely, fully and accurately notifying the enterprise about the situation of the enterprise in which he or his related person owns or has shares or contributed capital.
  • Representing the enterprise as a party for settlement of civil matters, whether as a plaintiff, a defendant, or a person with related interests and obligations before Arbitration, Court.
  • Representing the company to exercise other rights and obligations as prescribed by law.
  • The legal representative of the enterprise is personally responsible for the damage caused to the enterprise due to the violation of responsibilities as prescribed.
  • Taking joint responsibility for damage caused to the enterprise according to the provisions of the civil law and other relevant laws when the enterprise has many legal representatives without clearly dividing the rights and obligations of each person.

Cases not allowed to act as a legal representative

The following individuals may not hold the position of legal rep of an enterprise:

  • Cadres, civil servants and public employees according to the provisions of the Law on Cadres and Civil servants and the Law on Public Employees.
  • Officers, non-commissioned officers, professional soldiers, defense workers and officers in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, public security workers in agencies and units of the Vietnam People’s Public Security.
  • Professional leaders and managers in state-owned enterprises according to regulations.
  • Minors; people with limited civil act capacity; persons who have lost their civil act capacity; people with difficulties in cognition and behavior control.
  • Persons being examined for penal liability, detained, are serving prison sentences, are serving administrative handling measures at compulsory detoxification establishments or compulsory education establishments or are being banned by the Court from holding certain posts, practicing certain professions or doing certain jobs.
  • Other cases as prescribed by the Law on Bankruptcy, the Law on Anti-corruption.

Remarks

Number: A limited liability company and a joint stock company can have more than one legal rep. In case the company’s charter does not clearly stipulate the division of rights and obligations of each legal representative, each legal rep is an authorized representative of the enterprise before a third party.

Requirement to reside in Vietnam: Must ensure that there is always at least one legal representative residing in Vietnam. In case the only legal rep of the enterprise leaves Vietnam, he/she must authorize in writing another individual residing in Vietnam to perform his/her rights and obligations.

Work permit: Legal rep who is a foreigner needs to apply for a work permit according to regulations and comply with immigration issues when working in Vietnam.

In some cases, the legal representative holds other positions in the enterprise such as: (i) the chairman of the members’ council or the company president in a limited liability company or (ii) the chairman of the board of directors in a joint-stock company or (iii) director, general director, so the legal representative has additional rights and obligations of these titles.

The article is based on applicable law at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable law has changed and the specific case that the reader wishes to apply. Therefore, the article is only for reference.