1. Legal Basis
(a) Law on Enterprises 2020
Clauses 1 and 2, Article 12 of the Law on Enterprises 2020 provide:
- “The legal representative of an enterprise is an individual who represents the enterprise in exercising rights and obligations arising from transactions, represents the enterprise as the petitioner in civil matters, plaintiff, defendant, or party with related rights and obligations before Arbitration, Courts, and in other rights and obligations as prescribed by law.”
- “A limited liability company and a joint-stock company may have one or more legal representatives. The company’s Charter shall specify the number, managerial titles, rights, and obligations of each legal representative. Where such allocation of rights and obligations is not clearly defined, each legal representative shall be deemed a fully authorized representative of the enterprise before third parties; at the same time, all legal representatives shall be jointly liable for damages caused in accordance with the Civil Code and other relevant laws.”
This provision is the key legal basis for determining an enterprise’s representative status in transactions and litigation.
2. Analysis and Commentary
Article 12 of the Law on Enterprises 2020 affirms that Vietnamese law recognizes the model of multiple legal representatives. This is a flexible mechanism, reflecting the governance needs of large-scale enterprises where management and legal representation cannot rest solely on one individual.
However, if the company Charter does not clearly specify powers, responsibilities, or lacks an internal authorization mechanism, the following legal consequences arise:
- Each legal representative is automatically recognized as having full authority to represent the enterprise in relations with third parties and before the Court.
- The Court has the right to summon and identify all legal representatives as litigation participants.
- These representatives bear joint liability for damages caused to third parties, as stipulated in the Civil Code 2015 (Articles 288 and 290 on joint obligations).
Thus, the law prioritizes protecting third parties in transactions, ensuring certainty and legal safety in commercial relations. Enterprises cannot rely on internal arrangements to evade external responsibilities.
3. Practical Significance
- For enterprises: The allowance for multiple legal representatives under the Law on Enterprises requires companies to draft a clear Charter, specifying the scope of authority, titles, and responsibilities of each representative. Failure to do so may result in internal disputes or unexpected joint liability.
- For Courts: In adjudication, if the Charter does not provide clear allocation or no written authorization exists, requiring all legal representatives to participate in litigation ensures transparency, fairness, and prevents omission of liability.
- For third parties: This group enjoys the highest level of protection. They need not delve into the company’s internal arrangements but can rely on the business registration and statutory provisions to determine authority. This reduces risks and strengthens trust in transactions.
4. Conclusion
Clauses 1 and 2 of Article 12, Law on Enterprises 2020, establish a solid legal framework for determining the status of legal representatives in transactions and litigation. Nevertheless, to effectively operate this model, enterprises must proactively improve their Charters, clearly defining the powers and responsibilities of each representative to mitigate legal risks and ensure transparent corporate governance.
The multiple legal representatives mechanism reflects a progressive step in Vietnamese legislation, balancing the interests of enterprises, Courts, and third parties, thereby contributing to a more stable and legally secure business environment.
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1. Lawyer Vu Thi Phuong Thanh, Ha Noi Bar Association
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Khuong Ngoc Lan