During the course of business operations, the legal representative may be involved in selling the company’s assets in various transactions, including asset transfers, asset liquidation, or corporate restructuring. However, the legal representative is not entitled to unilaterally decide on every asset sale, particularly if the assets are of substantial value or the transaction may affect the interests of shareholders and owners. The following article clarifies the legal representative’s authority, the applicable legal requirements, the procedures that must be followed, and the common legal risks associated with the sale of company assets under the prevailing laws.

I. Common legal risks relating to the sale of company assets by the legal representative

The sale of company assets by the legal representative may lead to various legal risks if the transaction is conducted beyond the representative’s authority, fails to comply with the company's internal approval procedures, or adversely affects the interests of shareholders or owners.

  • Risk of exceeding representative authority when selling company assets: The legal representative is only authorized to conduct transactions within the scope of his or her representative authority under Article 141 of the Civil Code 2015. For high-value assets, the authority to approve the sale generally belongs to the company's internal governing body. 
  • Risk of transactions involving conflicts of interest or related parties: In practice, company assets may be sold to individuals or entities related to the company's managers or shareholders. According to Article 167 of the Law on Enterprise 2020, as amended and supplemented in 2025, transactions with related persons must be publicly disclosed and approved by the competent authority within the company. 
  • Risk of civil or criminal liability where the asset sale is intended to misappropriate assets or cause damage to the company: Enterprise managers are required to perform their rights and obligations honestly, prudently, and in the best interests of the company under Clause 1, Article 165 of the Law on Enterprise 2020, as amended and supplemented in 2025. If the legal representative abuses his or her position to sell company assets for the purpose of misappropriation or causing damage to the enterprise, he or she may be liable to compensate the company. In case criminal elements are present, the individual may also be prosecuted for the offence of Abuse of Position or Power to Misappropriate Property under Article 355 of the Criminal Code 2015, as amended and supplemented in 2017 and 2025.

II. Understanding the sale of company assets by the legal representative

1. Who is the legal representative selling company assets, and what is his or her role within the company?

In the operation of an enterprise, the legal representative’s sale of company assets is closely associated with his or her representative authority and responsibility for managing the enterprise’s assets. The legal representative is the individual appointed by the enterprise to act on behalf of the company in establishing and performing transactions, including executing contracts relating to the company’s assets, under Clause 1, Article 12 of the Law on Enterprise 2020, as amended and supplemented in 2025.

In performing such a role, the legal representative is responsible for acting in the name of the enterprise in transactions arising during business operations, ensuring that decisions are made within the proper scope of authority and in the best interests of the company. According to Article 139 of the Civil Code 2015, transactions established by a representative within the scope of his or her authority directly lead to rights and obligations for the represented entity.

2. In what circumstances must the legal representative obtain approval from the board of directors or the owner before selling company assets?

In business operations, the legal representative may execute transactions relating to the company’s assets; however, not all transactions may be decided unilaterally. For significant or high-value transactions, the sale of company assets generally requires prior approval from the company's governing body, such as the Board of Directors, the Members’ Council, or the company owner.

Under the Law on Enterprise 2020, as amended and supplemented in 2025, in certain circumstances, the legal representative may only execute and perform a transaction after obtaining a valid resolution or decision from the competent corporate body, depending on the type of enterprise:

  • The Members’ Council for limited liability companies under Article 55;
  • The Board of Directors for joint stock companies under Article 153;
  • The company owner for single-member limited liability companies under Article 75.

3. May the legal representative sell company assets to related parties (such as family members or affiliated companies), and what measures are required to ensure transparency?

In business operations, the legal representative may sell company assets to related parties, including family members or affiliated enterprises. However, such transactions inherently involve the risk of conflicts of interest and are therefore subject to strict legal control mechanisms.

Pursuant to the Law on Enterprise 2020, as amended and supplemented in 2025, transactions between a company and persons related to its managers must be publicly disclosed and approved by the competent corporate body, such as the Members’ Council, the Board of Directors, or the General Meeting of Shareholders, depending on the type of enterprise. Furthermore, any person having a related interest is prohibited from voting on the relevant transaction in order to ensure transparency and objectivity.

4. How are the rights of minority shareholders protected when the legal representative sells company assets?

During the process of selling company assets by the legal representative, the rights and interests of minority shareholders continue to be protected under enterprise law through internal corporate governance mechanisms and shareholders’ supervisory rights.

Pursuant to Clause 2, Article 115 of the Law on Enterprise 2020, as amended and supplemented in 2025, ordinary shareholders or groups of shareholders holding at least 5% of the total ordinary shares (or a lower percentage as prescribed by the company charter) are entitled to inspect and access corporate information. They are also entitled to request the convening of a General Meeting of Shareholders or request an inspection of the company’s management activities where there are grounds to believe that a transaction may cause damage to the enterprise, as provided in the same provision.

In joint stock companies, transactions involving the sale of high-value assets or transactions exceeding ordinary management authority must be approved by the General Meeting of Shareholders or the Board of Directors pursuant to Articles 138 and 153 of the Law on Enterprise 2020, as amended and supplemented in 2025. Such a mechanism enables minority shareholders to participate in the decision-making process or exercise oversight over such transactions.

III. Legal provisions governing the sale of company assets by the legal representative

1. How does the law on enterprises regulate the legal representative’s authority to sell company assets?

Pursuant to Clause 1, Article 12, the legal representative is the individual representing the enterprise in exercising the rights and performing the obligations arising from the enterprise’s transactions, and representing the enterprise as the petitioner in civil matters, as plaintiff, defendant, or person having related rights and obligations before courts or arbitral tribunals. Based on such a representative authority, the legal representative may act on behalf of the company in signing and performing transactions relating to the management, transfer, or sale of the enterprise’s assets.

However, the authority to dispose of company assets is not always exercised independently but must comply with the decision-making authority of the company’s internal governing bodies. For example, in a joint stock company, Clause 2, Article 153 provides that the Board of Directors has the authority to decide on the purchase and sale of assets having a value of less than 35% of the company’s total asset value as reflected in the most recent financial statements, unless the company charter provides otherwise. Transactions exceeding such a threshold must be approved by the General Meeting of Shareholders pursuant to Clause 2, Article 138.

2. What is the procedure for handling cases where the legal representative sells company assets beyond the authorized transaction limit?

  • Verification of representative authority and the transaction: The first step is to examine the relevant contract, internal resolutions, and the company charter to determine whether the legal representative exceeded the scope of his or her authority. According to Clause 1, Article 12 of the Law on Enterprise 2020, as amended and supplemented in 2025, the legal representative may only act on behalf of the enterprise within the scope of the assigned rights and obligations. Thus, an asset sale conducted beyond such authority may require a review of its legal validity.
  • Reporting the matter to the competent corporate authority: The issue should then be reported to the appropriate governing body for evaluation and determination of the appropriate course of action.
  • Implementing remedial measures or determining liability: Following the review, the company may decide to cancel, amend, or refuse to recognize the transaction if it concludes that the legal representative exceeded his or her authority or caused damage to the enterprise. In case the legal representative, as a company manager, has caused damage, the company or its shareholders may seek compensation under Clause 2, Article 165 of the Law on Enterprise 2020, as amended and supplemented in 2025.

3. If the legal representative sells company assets without authorization, does this constitute a violation and what are the legal consequences?

In corporate governance, although the legal representative is authorized to act on behalf of the company in transactions involving corporate assets, such authority must remain within the scope of representative authority prescribed by Clause 1, Article 141 of the Civil Code 2015. If the legal representative unilaterally sells company assets without authorization or without a decision of the competent corporate authority, such conduct may constitute an act exceeding the scope of representative authority.

Accordingly, if the legal representative sells company assets without the necessary authorization within the representative authority, such conduct constitutes a violation. The legal consequence is that the validity of the transaction may be subject to legal review. The legal representative may also be liable for any damage arising from the unauthorized sale if the transaction causes loss to the company, as enterprise managers are required to perform their rights and obligations honestly, prudently, and in the best interests of the company under Clause 1, Article 165 of the Law on Enterprise 2020, as amended and supplemented in 2025.

IV. Questions relating to the sale of company assets by the legal representative

1. Can the legal representative of a company authorize another person to conduct the sale of the company's assets?

During corporate management, the legal representative is not always required to personally conduct every transaction on behalf of the company. In certain circumstances, they may authorize another individual to act on their behalf in conducting the sale of the company's assets, provided that such authorization is granted in accordance with the law.

Specifically, under Clause 1, Article 138 of the Civil Code 2015, individuals and legal entities may authorize other individuals or legal entities to establish and perform civil transactions through an authorized representative. Accordingly, the legal representative of a company may execute a written authorization empowering another person to conduct a transaction involving the sale of the company's assets on the company's behalf, provided that such authorization is not contrary to the company's charter and remains within the scope of the company's lawful authority.

Such authorization shall be legally valid if it complies with the prescribed form and remains within the scope permitted by law. Nevertheless, the legal representative shall continue to take ultimate responsibility for any transaction conducted in the name of the enterprise.

2. What criminal liability may arise if the legal representative sells the company's assets for the purpose of misappropriation?

The legal representative has the authority to manage and dispose of the company's assets; however, such authority must be exercised for the benefit of the enterprise. Any transaction undertaken by the legal representative must fall within the scope of their representative authority as prescribed in Clause 1, Article 141 of the Civil Code 2015.

If the legal representative abuses such authority by selling the company's assets for the purpose of misappropriating them for personal gain, such conduct no longer constitutes an ordinary commercial transaction and may lead to criminal liability. In case the sale of the company's assets is conducted with the intention of misappropriation, the legal representative may not only be required to compensate the enterprise for any damages incurred but may also be held criminally liable in accordance with applicable law.

3. What civil litigation procedures apply in the case of a dispute arising from the sale of the company's assets by the legal representative?

A dispute may arise from the sale of the company's assets by the legal representative if the transaction is alleged to have exceeded the representative's authority, caused damage, or infringed upon the lawful rights and interests of the company or its shareholders. In such circumstances, the parties are entitled to request the Court to resolve the dispute through civil proceedings in order to protect their lawful rights and interests.

 

The civil litigation procedure generally includes the following steps:

  • The person whose lawful rights and interests have been infringed shall prepare a statement of claim together with supporting evidence in accordance with Article 186 of the Civil Procedure Code 2015, as amended and supplemented in 2025.
  • The lawsuit dossier shall be submitted to the competent Court having jurisdiction over business and commercial disputes under Article 30 of the Civil Procedure Code.
  • Upon acceptance of the case, the Court shall conduct mediation, collect evidence, and proceed with the trial to determine the legality of the transaction as well as the legal responsibilities of the relevant parties.

If a dispute arises in connection with the sale of the company's assets, the parties may institute civil proceedings before the competent Court to seek the resolution of the dispute and safeguard their lawful rights and interests.

4. How will the law handle a situation where the legal representative sells the company's assets while deliberately concealing an existing mortgage?

In transactions involving the sale of a company's assets, the legal representative has the obligation to provide truthful information and ensure that the assets are lawfully transferred. If the legal representative intentionally conceals the fact that the assets are subject to a mortgage or encumbered by financial obligations, such conduct may be deemed a breach of the duty of honesty in corporate management and may lead to legal liability under Clause 1, Article 165 of the Law on Enterprise 2020, as amended and supplemented in 2025.

If the concealment of such information misleads the purchaser regarding the legal status of the assets, the transaction may be declared invalid on the grounds of deception in accordance with Article 127 of the Civil Code 2015. In addition, the legal representative may be required to compensate the company or other relevant parties for any damages resulting from such conduct.

In case the legal representative conceals the existence of a mortgage with the intention of misappropriating assets or causing substantial damage, such conduct may also lead to criminal liability. For example, it may constitute the offence of Abuse of Trust to Appropriate Property under Article 175 of the Criminal Code 2015, as amended and supplemented in 2017.

5. Is the purchaser legally required to verify the legal status of the assets when the company's legal representative sells the company's assets? Why?

In transactions involving the purchase and sale of a company's assets, Vietnamese law does not require the purchaser to verify the legal status of the assets prior to entering into the transaction. Nevertheless, in practice, purchasers are generally expected to proactively examine the legal status of the assets in order to ensure the legality of the transaction and minimize potential legal risks.

Pursuant to Clause 1, Article 117 of the Civil Code 2015 governing the validity conditions of civil transactions, a civil transaction is established on the basis of the parties' voluntary agreement. Accordingly, each party is responsible for independently verifying information relevant to the transaction. Furthermore, if the assets are subject to a mortgage or restrictions on the owner's right of disposition and the purchaser fails to conduct adequate due diligence, the transaction may subsequently become the subject of disputes or its legal validity may be affected in accordance with the provisions of civil law.

V. Are you looking for a reputable legal expert to assist you with issues relating to the sale of company assets by the legal representative?

If legal issues arise in connection with the sale of a company's assets, seeking advice from experienced legal professionals will enable the parties involved to accurately assess potential legal risks and determine appropriate solutions. NPLaw is available to assist clients by reviewing transactions, providing legal advice on relevant regulations, and recommending practical solutions to safeguard the lawful rights and interests of enterprises throughout the transaction process.

The above information is provided for reference purposes only. Should you require legal advice tailored to your specific circumstances, please contact NPLaw Law Firm for prompt and professional legal assistance.