Question19: I and some friends plan to establish a business and choose me as the legal representative of the company. Please indicate the definition of legal representative?
Answer:
The definition of legal representative is provided in Paragraph 1, Article 13 of the Enterprises Law. Accordingly, the legal representative of an enterprise is the individual that exercises the rights and fulfills the obligations on when making transactions on behalf of the enterprise, represents the enterprise as the plaintiff, defendant, and person with relevant interests and duties before the arbitral tribunal, the court, exercises other rights and fulfills other obligations as prescribed by law.
Question 20: As I may know, the Enterprise Law 2014 has changed the regulations on number of legal representatives. Please indicate current regulations on the number of legal representatives?
Answer:
Provision on the number of legal representatives is one of the highlights of the Enterprises Law 2014. Accordingly, the Enterprise Law 2014 allows limited liability companies and joint-stock companies to have more than one legal representative.
This regulation is aimed at creating favorable conditions for enterprises, allowing enterprises the full right to decide on the number of legal representatives for themselves in exercising the rights and obligations arising from transactions, represents the enterprise as the plaintiff, defendant, and person with relevant interests and duties before the arbitral tribunal, the court, exercises other rights and fulfills other obligations as prescribed by law.
It can be said that this is one of the fundamental changes compared to the 2005 Enterprise Law (Limited Liability Company and joint stock Company with only one representative at law). From the perspective of business freedom, this is a breakthrough rule in giving the business the full power to decide the number of legal representatives, enabling enterprises to integrate quickly and take advantage of every business opportunity through legal representative. In addition, this provision will help to remove obstacles for enterprises in case the sole representative of the enterprise does not cooperate, does not meet the requirements of members/shareholders in the process of business management internally as well as dealing with outside partners. By having more than one representative, the abuse of power, noncooperation as mentioned above will be disabled.
Moreover, along with allowing limited liability companies, the company may have more than one legal representative in the Enterprise Law 2014, to help businesses integrate faster and take advantage of all business opportunities. Decree 78 / 2015 / ND-CP dated 14/9/2015 of the Government on enterprise registration stipulates that if an enterprise has more than one legal representatives, their signatures in the application for enterprise registration have the same value. This regulation will increase the initiative and save time and money for enterprises when carrying out procedures for business registration, especially large enterprises with many legal representatives.
Question 21: Please indicate the responsibilities of the legal representative according to current regulations?
Answer:
Under the provisions of Article 14 of the Enterprise Law 2014, the legal representative shall have the following responsibilities:
a) Perform the given rights and obligations in a truthful, careful manner to ensure the enterprise’s lawful interests;
b) Act in the best interest of the enterprise; do not use information, secrets, business opportunities of the enterprise; do not misuse the position, power, or property of the enterprise for self-seeking purposes or serving the interest of other entities;
c) Notify the enterprise of the representative and his/her related persons owning or having the controlling stake or shares in other enterprises.
The legal representative of the enterprise is personally responsible for the damage caused by his/her violations against the above obligations.
Question 22: Please indicate current regulations on the residence of the legal representative?
Answer:
Under the provisions of the Enterprise Law 2014, an enterprise must ensure that at least one legal representative resides in Vietnam. f the enterprise has only one legal representative, such person must resides in Vietnam and authorizes another person in writing to perform the legal representative’s right and obligations when leaving Vietnam.
In case the legal representative does not return to Vietnam at the end of the authorization period and does not give another authorization, the authorized person of the limited liability company, joint-stock company, or partnership shall keep performing the legal representative’s rights and obligations within the scope of authorization until the legal representative goes back to work at the enterprise, or until the company owner, the Board of members, or the Board of Directors decides to designate another person as the legal representative of the enterprise. This is a new point of the Enterprise Law 2014 to solve the case when the legal representative is often absent in Vietnam.
Question 23: Our company has only one legal representative and this person is absent in Vietnam for more than 30 days without authorization. Currently the company is confusedon dealing with this issue. Please indicate the current regulations on this issue?
Answer:
Under the provisions of the Enterprise Law 2014, If the enterprise has only one legal representative and such person is not present in Vietnam for more than 30 days without authorizing another person to act as the legal representative, or such person is dead, missing, detained, sentenced to imprisonment, or legally incompetent, then the company owner, the Board of members, or the Board of Directors shall designate another person as the legal representative.
With regard to a limited liability company with two members, if the member who is the legal representative of the company is detained or sentenced to imprisonment, makes a getaway, is missing or legally incompetent, or is banned from practicing by the court for smuggling, producing counterfeits, running illegal businesses, tax evasion, fraud, or another crime defined by Criminal Code, the other member is naturally the company’s legal representative until the Board of members makes a decision on company’s legal representatives.
Hoang Thanh Tuan
(Source: Agency for Business Registration)