The legal representative of a business is an indispensable entity. This is considered crucial and essential information on the Business Registration Certificate. They are also one of the entities entitled to carry out the initial business registration procedures with the State authorities.
This article provides a comprehensive guide to the essential knowledge about the legal representative of a business for those currently serving as legal representatives and those preparing to establish a business.
1. The concept, role, and responsibilities of a legal representative.
1.1. What is the legal representative of a business?
The legal representative of the business An individual is an individual representing a business in exercising the rights and obligations arising from the business's transactions, representing the business as a party requesting the resolution of civil matters, plaintiff, defendant, or party with related rights and obligations before arbitration panels, courts, and other rights and obligations as prescribed by law.
1.2. Who is the legal representative of the business?
Based solely on the basic concept above, it is difficult to determine who will be the legal representative of a business. Therefore, the legal representative of a business is determined based on the specific type of business. However, regardless of the type of business, the number and position of the legal representative are clearly stated in the company's charter.
1.2.1. Legal representative of a One-Member Limited Liability Company
A limited liability company with a single member may have one or more legal representatives.
In a Limited Liability Company with a single owner, there must be at least one legal representative of the company, who is the Chairman of the Board of Members, the Chairman of the Company, or the Director or General Director. If the company's charter does not specify otherwise, the Chairman of the Board of Members or the Chairman of the Company shall be the legal representative of the company.
1.2.2. The legal representative of a Limited Liability Company with two or more members.
Similar to a single-member limited liability company, a limited liability company with two or more members can also have one or more legal representatives.
In a limited liability company with two or more members, the company must have at least one legal representative, either the Chairman of the Board of Members, the Director, or the General Director. If the company's charter does not specify otherwise, the Chairman of the Board of Members is the company's legal representative.
1.2.3. Legal representative of the joint-stock company
A joint-stock company may have one or more legal representatives.
For joint-stock companies, regulations stipulate that if the company has only one legal representative, the Chairman of the Board of Directors, the Director, or the General Director is the company's legal representative. If the Articles of Association do not specify otherwise, the Chairman of the Board of Directors is the company's legal representative. If the company has more than one legal representative, the Chairman of the Board of Directors and the Director or General Director are automatically the company's legal representatives.
1.2.4. Legal representative of the Partnership Company
Unlike other types of businesses, in a partnership company, the partners are the legal representatives of the company. Furthermore, only the Chairman of the Board of Partners, the Director, or the General Director can "represent the company as a party requesting the resolution of civil matters, plaintiff, defendant, or party with related rights and obligations before arbitration panels or courts; and represent the company in exercising other rights and obligations as prescribed by law."
Therefore, it can be understood that the legal representative of a partnership company is a partner holding the position of Chairman of the Board of Members, Director, or General Director of the Company.
1.2.5. Legal representative of a private enterprise
The owner of a private enterprise is the legal representative, representing the private enterprise as the party requesting the resolution of civil matters, plaintiff, defendant, or party with related rights and obligations before arbitration panels and courts, and representing the private enterprise in exercising other rights and obligations as prescribed by law.
1.3. Responsibilities of the legal representative of the enterprise
The legal representative of the business has the following responsibilities:
- To exercise assigned rights and obligations honestly, carefully, and to the best of their ability in order to ensure the legitimate interests of the business;
- Be loyal to the interests of the enterprise; do not abuse your position, title, or use the enterprise's information, know-how, business opportunities, or other assets for personal gain or to serve the interests of other organizations or individuals;
- To promptly, fully, and accurately inform businesses about businesses that they or their related parties own or have shares or capital contributions in, as stipulated in this Law.
- The legal representative of the enterprise is personally liable for damages to the enterprise resulting from violations of the aforementioned responsibilities.
2. Who is eligible to act as the legal representative of a business?
The person acting as the legal representative must meet the following requirements:
2.1. Possess full legal capacity.
- From the age of 18 and above;
- Possesses full legal capacity. Not deprived of legal capacity; not a person with difficulties in understanding or controlling their behavior; not subject to limitations in legal capacity.
2.2. Not subject to prohibitions on establishing and managing businesses.
The following organizations and individuals are not entitled to establish and manage businesses in Vietnam:
a) State agencies and units of the people's armed forces using state assets to establish businesses for the purpose of generating private profits for their respective agencies or units;
b) Officials, civil servants, and public employees as defined by the Law on Officials and Civil Servants and the Law on Public Employees;
c) Officers, non-commissioned officers, professional soldiers, workers, and defense employees 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 Public Security, except for those appointed as authorized representatives to manage the State's capital contribution in enterprises or to manage state-owned enterprises;
d) Professional leaders and managers in state-owned enterprises as prescribed in point a, clause 1, Article 88 of this Law, excluding those appointed as authorized representatives to manage the State's capital contribution in other enterprises;
e) Minors; persons with limited legal capacity; persons who have lost their legal capacity; persons with difficulties in understanding and controlling their behavior; organizations without legal personality;
f) Persons who are being prosecuted for criminal offenses, are being held in temporary detention, are serving prison sentences, are undergoing administrative sanctions at compulsory rehabilitation centers or compulsory education centers, or are prohibited by the Court from holding certain positions, practicing certain professions, or performing certain jobs; and other cases as prescribed by the Bankruptcy Law and the Law on Prevention and Combat of Corruption.
If requested by the Business Registration Authority, the person registering the establishment of a business must submit a criminal record certificate to the Business Registration Authority.
g) An organization that is a commercial legal entity prohibited from doing business or operating in certain fields as stipulated in the Penal Code.”
2.3. Tax identification number not locked.
- Tax identification numbers are locked in tax and business management data; this is usually due to enforced tax debt collection or incomplete procedures for other businesses where the person is the legal representative, or for individual business owners who have not fulfilled their tax obligations and have their tax identification numbers locked.
This situation is not explicitly regulated in the business law, but is restricted by provisions of other relevant specialized laws.
The legal representative does not necessarily have to be a shareholder in the company.
3. Number of legal representatives of the enterprise
The provision allowing a business to have one or more legal representatives is a more open and flexible regulation compared to previous laws. However, on the other hand, regarding the question "How many companies can one person represent legally?", are the legal regulations on this matter the same as those on the number of legal representatives allowed for a business?
3.1. How many companies can one person legally represent?
While the 2005 Enterprise Law stipulated that an individual could only be the registered owner of one company, regardless of whether it was domestic or foreign; and that a Director or General Director could not simultaneously be the Director or General Director of another enterprise, the 2014 and 2020 Enterprise Laws completely abolished this provision, except for the exception of state-owned enterprises.
Furthermore, according to the 2015 Civil Code, an individual or legal entity may represent multiple individuals or legal entities, but may not act in the name of the represented party to establish or carry out civil transactions with themselves or with a third party for whom they also act as a representative, except in cases where the law provides otherwise.
From the above, it can be seen that current business law only stipulates that a business can have more than one legal representative (depending on the type of business) but does not explicitly address the issue of representing the company's employees. This also means that the law does not prohibit this in this case.
Therefore, it can be understood that one person can be named as the legal representative for multiple companies.
3.2. Points to note regarding one person acting as legal representative for multiple companies
The law does not explicitly state whether or not a person can legally represent multiple companies, but there are certain restrictions in some specific cases as follows:
For Partnership Companies:
General partners are the legal representatives of the company. General partners are not allowed to own a private enterprise; nor are they allowed to be general partners in another partnership company except with the unanimous consent of the remaining general partners.
From the above regulation, it can be seen that if a person is the legal representative of a partnership company, they cannot simultaneously be the legal representative of a private enterprise and can only be the legal representative of another partnership company with the consent of the remaining partners.
For private enterprises:
Each individual is only entitled to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a household business or a general partner in a partnership company. The owner of a private enterprise is the legal representative of the company.
The above regulation means that when a person is the legal representative of a private enterprise, they cannot simultaneously be the legal representative of another private enterprise or partnership company.
3.3. The company has multiple legal representatives.
Limited liability companies and joint-stock companies There may be one or more legal representatives. The company's charter specifies the number, management titles, and rights and obligations of the legal representative of the enterprise.
If a company has more than one legal representative, the company's charter shall specify the rights and obligations of each legal representative.
In cases where the division of rights and obligations of each legal representative is not clearly stipulated in the company's charter, each legal representative of the company is a fully authorized representative of the enterprise before third parties; all legal representatives shall be jointly liable for damages caused to the enterprise in accordance with civil law and other relevant laws.
3.4. Requirements regarding the presence and residence of the legal representative of the enterprise
Businesses must ensure that at least one legal representative resides in Vietnam.
(I.e. Download the Legal Representative Authorization Form here.
(*) When only one legal representative remains residing in Vietnam, that person, upon leaving Vietnam, must authorize another individual residing in Vietnam in writing to exercise the rights and obligations of the legal representative.
In this case, the legal representative remains responsible for exercising the rights and fulfilling the obligations that have been delegated.
(**) If the authorization period as stipulated in point (*) expires and the legal representative of the enterprise has not returned to Vietnam and no other authorization has been given, the following regulations shall apply:
The authorized person continues to exercise the rights and obligations of the legal representative of the private enterprise until the legal representative of the enterprise returns to work at the enterprise;
The authorized person continues to exercise the rights and obligations of the legal representative of the limited liability company, joint-stock company, or partnership until the legal representative of the company returns to work at the company or until the company owner, the Board of Members, or the Board of Directors decides to appoint another person to be the legal representative of the enterprise.
(i) Except as provided in (ii) below, for a business with only one legal representative and this person is absent from Vietnam for more than 30 days without authorizing another person to exercise the rights and obligations of the legal representative of the business, or dies, goes missing, is being prosecuted for criminal responsibility, is detained, is serving a prison sentence, is undergoing administrative measures at a compulsory rehabilitation center or compulsory education center, has limited or lost civil capacity, has difficulties in understanding or controlling their behavior, is prohibited by the Court from holding a position, practicing a profession or doing a certain job, the company owner, the Board of Members, or the Board of Directors shall appoint another person to be the legal representative of the company.
(ii) For a limited liability company with two members, if one of the members, who is an individual acting as the company's legal representative, dies, goes missing, is under criminal investigation, is detained, is serving a prison sentence, is undergoing administrative measures at a compulsory rehabilitation center or compulsory education center, has absconded from their place of residence, has limited or no civil capacity, has difficulties in understanding or controlling their behavior, or is prohibited by the Court from holding a position, practicing a profession, or performing a certain job, then the remaining member shall automatically become the company's legal representative until a new decision is made by the Board of Members regarding the company's legal representative.
(iii) The court and other competent procedural authorities have the right to appoint a legal representative to participate in the proceedings in accordance with the law.
4. Change of legal representative
According to the law, a business may have one or more legal representatives, depending on the type of business. During operation, a business can add, remove, or change legal representatives as desired and according to its company structure.
However, this change requires notifying the Department of Planning and Investment of the change in the legal representative.
4.1. Documents for changing the legal representative
The documents required for changing the legal representative of a business include:
- Notification of change of legal representative.
- Copies of the individual's legal documents for the new legal representative.
- Resolutions, decisions, and copies of meeting minutes, as per the specific case:
- Limited Liability Company (Single Member): Resolutions and decisions of the company owner regarding the change of the legal representative;
- Limited Liability Company with Two or More Members: Resolutions, decisions, and copies of the minutes of the Board of Members' meeting regarding the change of the legal representative;
- Joint Stock Company:
- In cases where the change of the legal representative results in a change to the company's charter: Resolution and a copy of the minutes of the General Meeting of Shareholders regarding the change of the legal representative;
- In cases where the change of the legal representative does not alter the content of the company's charter other than the name, signature, and title of the legal representative as stipulated in Article 24 of the Enterprise Law: Resolutions, decisions, and copies of the minutes of the Board of Directors' meetings.
- In the case of registering a change of legal representative as stipulated in Clause 6, Article 12 of the Enterprise Law, the resolution, decision, and copy of the minutes of the meeting of the Board of Members shall be replaced by a copy of the document confirming that the legal representative of the company has died, is missing, is being prosecuted for criminal responsibility, is being detained, is serving a prison sentence, is undergoing administrative measures at a compulsory rehabilitation center or compulsory education center, has fled from their place of residence, has limited or lost civil capacity, has difficulties in understanding or controlling their behavior, or has been prohibited by the Court from holding a position, practicing a profession, or performing a certain job.
- If the applicant is an authorized individual, the application must include the following:
- Authorization document for an individual to carry out procedures related to business registration;
- Copies of the authorized individual's legal documents.
4.2. Steps to change the legal representative
Once all the necessary documents for changing the legal representative have been prepared, the business will proceed with the following steps:
Step 1: Submit your application. There are three ways for businesses to choose from:
- Method 1: Submit directly to the Business Registration Authority under the Department of Planning and Investment where the enterprise's head office is located;
- Method 2: Submit via postal service;
- Method 3: Submit online via the National Business Registration Portal.
Step 2: Receiving and processing applications: The business registration agency will receive the business's application and issue a receipt with a date for receiving the results.
Step 3: Results will be delivered within 03 (three) working days from the date of receipt of the application. There are two ways to receive the results as follows:
- Method 1: Businesses can directly receive the application at the Business Registration Authority under the Department of Planning and Investment where the business's head office is located;
- Option 2: Register to receive results via postal service.
4.3. Changing the legal representative online
During its operation, a business will frequently restructure its organizational model to guide its future development. Several issues revolve around the authority, responsibilities, and changes to the legal representative.
When changing the legal representative of a business, there are several ways to submit the application to the Business Registration Authority. The most convenient method is to submit the application for changing the legal representative online, and the process is as follows:
Step 1: Prepare all necessary documents for changing the legal representative.
Step 2: Submit your application through the Business Registration Portal.
(I.e. Download the guide on how to file a change of legal representative online here.