The legal representative of an enterprise is an important position in the process of establishing and operating an enterprise. Therefore, enterprises and individuals need to clearly understand the rights and obligations of this position. This article will overview the roles of representatives in enterprises and some issues to keep in mind.
1. Role of the legal representative
According to the Enterprise Law 2020, the Legal Representative of an enterprise (“LR”) is an individual who represents the enterprise to exercise the rights and obligations arising from the enterprise’s transactions, representing the enterprise with the status of a person requesting civil matter resolution, plaintiff, defendant, person with related rights and obligations before the Arbitrator, Court and other rights and obligations according to the provisions of law.
2. Responsibilities of enterprise representatives
LR has the following responsibilities:
- Carry out assigned rights and obligations honestly, carefully, and best to ensure the legitimate interests of the enterprise.
- Loyal to the interests of the enterprise; Do not abuse your position or position and use information, know-how, business opportunities, or other assets of the enterprise for personal gain or to serve the interests of other organizations or individuals.
- Notify enterprises promptly, fully, and accurately about the enterprises in which he/she and his/her related persons own or have shares or capital contributions.
- Represent enterprises as requesters to resolve civil matters, plaintiffs, defendants, and people with related rights and obligations before Arbitrators and Courts.
- The legal representative of the enterprise is personally responsible for damage to the enterprise due to violation of prescribed responsibilities.
- Be jointly responsible for damages caused to the enterprise according to the provisions of civil law and other relevant laws when the enterprise has many legal representatives without clearly dividing rights and obligations for each person.
- Represent the company to exercise other rights and obligations according to the provisions of law.
3. Cases of not being allowed to act as legal representatives
Also, according to the provisions of the Enterprise Law 2020, the following individuals are not allowed to hold the position of LR of the enterprise:
- Cadres, civil servants, and public employees according to the provisions of the Law on Cadres, Civil Servants, and the Law on Public Employees.
- Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, and police workers in agencies and units of the Vietnam People’s Police.
- Leaders and professional managers in state-owned enterprises according to regulations.
- Minors; people with limited civil act capacity; people who have lost their civil act capacity; People with difficulty in cognition and behavior control.
- People who are being prosecuted for criminal liability, are detained, are serving prison sentences, are serving administrative measures at compulsory detoxification facilities, compulsory education establishments or are being banned by the Court holding positions, prohibited from practicing certain professions or doing certain jobs.
- Other cases according to the provisions of the Bankruptcy Law and the Law on Prevention and Combat of Corruption.
4. Issues to note for legal representatives of enterprises
4.1 Quantity
Limited liability companies and joint stock companies can have more than one LR. In case the company charter does not clearly stipulate the division of rights and obligations of each LR, each LR is a competent representative of the enterprise before a third party.
4.2 Residency requirement in Vietnam
Must ensure that there is always at least one LR residing in Vietnam. In case an enterprise has only one LR, when leaving Vietnam, the LR must authorize in writing another individual residing in Vietnam to exercise his or her rights and obligations.
4.3 Work permit
LRs who are foreigners need to apply for a work permit according to regulations and comply with immigration issues when working in Vietnam.
In some cases, the LR holds other positions in the enterprise, such as:
- chairman of the board of members or company chairman in a limited liability company
- chairman of the board of directors in a joint stock company
- director, general director, the LR has additional rights and obligations of these positions.
Hopefully, through this article, enterprises will have an overview of legal representatives. For an enterprise to survive and develop sustainably, choosing a suitable and reliable legal representative is one of the important factors. They are not only representatives of the organization, but also important contributors to building a solid legal foundation, bringing stability and safety to the enterprise’s business operations.
