A corporate manager plays a pivotal role in directing and ensuring that business operations are conducted in compliance with applicable laws. Alongside the authority vested in them, corporate managers are also subject to specific legal obligations. A clear understanding of the legal responsibilities of corporate managers is essential for enhancing governance efficiency, mitigating risks, and promoting sustainable development. The following section provides an overview of the legal liabilities of corporate managers under the current legal framework.
1. Definition of a Corporate Manager
A corporate manager is a person who is either designated by law or appointed or elected to hold managerial positions within a company, tasked with operating daily business activities or guiding the company’s long-term strategic direction.
According to Clause 24, Article 4 of the 2020 Law on Enterprises of Vietnam, a corporate manager includes: “a manager of a private enterprise and a manager of a company, including the owner of a private enterprise, general partners, Chairperson of the Members’ Council, members of the Members’ Council, President of the company, Chairperson of the Board of Directors, members of the Board of Directors, Director or General Director, and individuals holding other managerial titles as prescribed by the company’s charter.”
Therefore, in addition to the statutory titles specified in the Law on Enterprises, a corporate manager may include individuals holding other managerial positions defined under the company’s charter.
It should also be noted that not all corporate managers are legal representatives of the company. According to enterprise law, except in the case of partnerships (where general partners are legal representatives) and private enterprises (where the business owner is the legal representative), limited liability companies and joint stock companies may have one or more legal representatives. The specific number, titles, and rights and obligations of legal representatives must be clearly stipulated in the company’s charter.
2. Legal Responsibilities of Corporate Managers
The legal responsibility of a corporate manager refers to the adverse legal consequences that an individual or organization must bear upon breaching the law. In the field of corporate governance, such responsibility may arise from the labor contract, the company charter, or applicable legal provisions. Depending on the nature, scale, and specific characteristics of each company, different principles and legal obligations may be imposed on managers.
The Law on Enterprises 2020 outlines the responsibilities of corporate managers corresponding to different types of enterprises under Articles 71, 83, and 165. In general, the responsibilities of corporate managers encompass the following key duties:
- First, a corporate manager must exercise the rights and perform the obligations assigned to them in an honest, prudent, and optimal manner to safeguard the lawful interests of the company. Although the law does not define “honest, prudent, and optimal,” it can be interpreted as requiring the manager to act in good faith, with full dedication to the company, ensuring the company is operated in the best possible direction, and avoiding any self-dealing or harm to the company. The company may also set out specific principles and standards in its charter or internal regulations to bind the manager’s responsibilities more concretely.
- Second, the manager must remain loyal to the interests of the company and its members/shareholders/owners and must not abuse their position or authority or use information, know-how, business opportunities, or company assets for personal gain or for the benefit of other individuals or organizations. This provision aims to prevent misuse of entrusted authority to access and exploit confidential information, trade secrets, business opportunities, or assets to the detriment of the company and its stakeholders.
- Third, the manager is obligated to fully and accurately disclose to the company their ownership, shareholding, or capital contributions in other enterprises, as well as the ownership of related parties in accordance with the law.
- Fourth, the manager must comply with the company’s charter, the Law on Enterprises, other relevant laws, and resolutions/decisions of the company’s owner or governing body. In corporate governance and commercial operations, the Law on Enterprises and related laws provide general principles and mandatory rules, while the company charter may flexibly regulate specific governance provisions, depending on the operational realities and capital structure of the company.
In cases where the manager fails to properly fulfill their assigned responsibilities or commits a violation of the law, the following legal liabilities may apply:
- Civil liability: If the manager breaches their obligations as outlined above, they may bear personal liability (for actions taken individually) or joint liability (for collective decisions), and may be required to compensate for losses, return any unjust benefits, or indemnify the company and third parties.
- Criminal liability: In addition to civil compensation, a manager may also face criminal prosecution for criminal acts committed during the course of managing the enterprise. If the enterprise is subject to criminal liability, any individual directly involved in directing or executing the unlawful act may also bear corresponding criminal liability, depending on their level of involvement.
Through the foregoing article, TLA has provided you with an overview of the legal responsibilities of corporate managers in business operations. Should you have any further questions or require legal assistance, please do not hesitate to contact TLA Law Fiem Limited for timely advice and support.
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1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn. – NTQC-