In a business, the legal representative always holds the most important position, giving directions and decisions that directly affect the operation and development of the business. Therefore, before set up an enterprise, it is necessary to clearly understand the following information about legal representative:
What is a legal representative?
Pursuant to Clause 1, Article 12 of the 2020 Enterprise Law, legal representative of an enterprise presents the enterprise to exercise the rights and perform the obligations arising from its transactions. They also represent the enterprise in the capacity as requester for settlement of civil cases, plaintiff, respondent or person with related interests or obligations before arbitration or court, and has other rights and obligations as prescribed by law.
The number of legal representatives of an enterprise in Vietnam
Clause 2, Article 12 of the 2020 Enterprise Law stipulates that a limited liability company or joint stock company may have one or more than one legal representative. The company charter must specify the number and managerial titles, and rights and obligations of legal representatives, of the company.
If a company has more than one legal representative, the company charter must specify the rights and obligations of every legal representative.
In case the division of rights and obligations among legal representatives is not specified in the company charter, every legal representative may act as a fully competent representative of the company before a third party; all legal representatives shall bear joint responsibility for damage caused to the company in accordance with the civil law and other relevant laws.
Conditions of the legal representative of an enterprise in Vietnam
The legal representative of the company can be the legal representative of many different enterprises. However, there are 02 cases where the following legal representative will not continue to be the legal representative of the company:
- The representative of the company whose tax identification number is suspended, i.e. in the course of operation, the enterprise does not report tax, does not fulfill its tax obligations, the enterprise does not operate but does not carry out the procedures for notification of temporary cessation of operation with the business registration authority and abandon the enterprise.
- According to regulations on public company governance, there are limitations: The Chairman of the Board of Directors cannot concurrently hold the position of Director (General Director) as the representative of the same public company.
Responsibilities of the legal representative of the enterprise
Article 13 of the Law on Enterprise 2020 states that the legal representative of an enterprise has the following responsibilities:
- To exercise and perform the assigned rights and obligations in an honest, prudent and best manner in order to guarantee the lawful interests of the enterprise;
- To be loyal to the interests of the enterprise; neither to abuse his/her title or position nor to use business information, know-hows or opportunities or other assets of the enterprise for personal gain or for the interests of other organizations or individuals;
- To notify the enterprise in a timely, complete and accurate manner of other enterprises which he/she or his/her related party owns or in which he/she or his/her related party has shares or contributed capital amounts in accordance with this Law.
Moreover, the legal representative of an enterprise shall bear personal liability for damage caused to the enterprise due to his/her breach of the responsibilities specified in Clause 1 of this Article.
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-Nguyen Huong Huyen-