An enterprise is an organization with legal status established and operating in accordance with the law, with the participation of one or more individuals or organizations contributing capital together. So, what role do the enterprise representatives need to fulfill? Let's follow the article below.
I. The role of the enterprise representatives
The enterprise representative is an important position within the enterprise, playing a crucial role in executing the enterprise's rights and obligations and protecting its legitimate interests. Therefore, the selection of an enterprise representative needs to be carefully considered, ensuring that the representative has sufficient competence, qualifications, and experience to perform the assigned tasks effectively.
II. Legal regulations on enterprise representatives
The legal regulations regarding enterprise representatives are as follows:
1. What is an enterprise representative?
Pursuant to Clause 1, Article 12 of the Law on Enterprises 2020, the legal representative of the enterprise is an individual representing the enterprise to perform rights and obligations arising from the enterprise's transactions, representing the enterprise as a requester for civil resolution, plaintiff, defendant, or person with related rights and obligations before the Arbitration, Court, and other rights and obligations as regulated by law.
Accordingly, the legal representative of the enterprise must be an individual and represent the enterprise in terms of rights, obligations, and legal status before the Court and Arbitration.
2. Who can be the representative of the enterprise?
Currently, the law does not regulate any specific conditions that an enterprise representative must meet. However, the person acting as the representative of the enterprise must meet the following basic condition:
- Having full civil act capacity
- Not being prosecuted for criminal responsibility, being detained, serving a prison sentence, being subjected to administrative penalty measures at compulsory treatment of drug addiction facilities, compulsory education facilities, or being prohibited from doing business, holding management positions in enterprises as per the Court's decision;
- Has the professional qualifications and experience that meet the requirements of the type of enterprise.
3. Responsibilities of the enterprise representative
Pursuant to Article 13 of the Law on Enterprises 2020, which regulates the responsibilities of the enterprise representative
1. Perform the assigned rights and duties honestly, cautiously, and to the best of your ability to ensure the legitimate interests of the enterprise;
2. Loyal to the interests of the enterprise; do not abuse position, title, and use information, secrets, business opportunities, or other assets of the enterprise for personal gain or to serve the interests of other organizations or individuals;
3. Timely, complete, and accurate notification to the enterprise about the enterprise that you or your related persons own or have shares or capital contributions in, as regulated by this Law.
III. Answering some questions about the enterprise representative
1. How many enterprise representatives can a company have?
Pursuant to Clause 2, Article 12 of the Law on Enterprises 2020, it is regulated as follows:
Limited liability companies and joint-stock companies can have one or more legal representatives. The company's charter specifies the number, management titles, and rights and obligations of the legal representatives of the enterprise. If the company has more than one legal representative, the company's charter specifies the rights and obligations of each legal representative. In case the division of rights and obligations of each legal representative is not clearly specified in the company's charter, each legal representative of the company is fully authorized to represent the enterprise before third parties; all legal representatives must jointly bear responsibility for damages caused to the enterprise in accordance with civil law and other relevant legal regulations.
Thus, the law does not restrict the representatives of enterprises.
2. Can the enterprise representative authorize someone else when the person is not in Vietnam?
Pursuant to Clause 3, Article 12 of the Law on Enterprises 2020, which regulates the representative of the enterprise as follows:
The enterprise must ensure that there is always at least one legal representative residing in Vietnam. When there is only one legal representative residing in Vietnam, this person must authorize another individual residing in Vietnam in writing to perform the rights and obligations of the legal representative when leaving Vietnam. In this case, the legal representative must still be responsible for the execution of the authorized rights and obligations.
Thus, the enterprise representative can authorize someone else when not in Vietnam.
3. Do all legal representatives of the enterprise bear joint responsibility when one person causes damage to the enterprise?
Pursuant to Clause 2, Article 12 of the Law on Enterprises 2020, if a company has more than one legal representative, the company's charter must specifically regulate the rights and obligations of each legal representative. If the rights of each individual are not clearly defined, all legal representatives must be jointly responsible for damages caused to the enterprise in accordance with civil law and other relevant legal regulations.
4. Can the representative of a Vietnamese enterprise have foreign nationality?
Currently, Vietnamese law does not restrict foreigners from being legal representatives of enterprises in Vietnam, and these individuals must meet the conditions regarding quantity and residence duration pursuant to clauses 3, 4, and 5 of Article 12 of the Law on Enterprises 2020 as follows:
- The enterprise must ensure that there is always at least one legal representative residing in Vietnam. When there is only one legal representative residing in Vietnam, this person must authorize another individual residing in Vietnam in writing to perform the rights and obligations of the legal representative when leaving Vietnam. In this case, the legal representative must still be responsible for the execution of the authorized rights and obligations.
- In the event that the authorization period pursuant to Clause 3 of this Article has expired and the legal representative of the enterprise has not returned to Vietnam and there is no other authorization, the following regulations shall apply:
1. The authorized person continues to perform 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;
2. The authorized person continues to perform 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, Members' Council, or Board of Directors decides to appoint another person as the legal representative of the enterprise.
- Except for the cases pursuant to Clause 6 of this Article, for enterprises with only one legal representative who is absent from Vietnam for more than 30 days without authorizing another person to perform the rights and obligations of the legal representative of the enterprise, or who dies, goes missing, is being prosecuted for criminal responsibility, is detained, is serving a prison sentence, is undergoing administrative penalty measures at a compulsory treatment of drug addiction facility, a compulsory education facility, is restricted or loses civil act capacity, has difficulties in perception, behavior control, is prohibited by the Court from holding a position, practicing a profession, or doing certain jobs, the company owner, the Members' Council, or the Board of Directors shall appoint another person as the legal representative of the company.
5. Will an enterprise representative who abuses their position beyond their authority be punished according to the law?
Determining the scope of representation will serve as the basis for measuring the consequences of civil transactions established and executed by the representative beyond the scope of representation pursuant to Article 143 of the Civil Code 2015 as follows:
- Civil transactions established and executed by a representative beyond the scope of their authority do not create rights or obligations for the represented person regarding the part of the transaction executed beyond the scope of authority, except in the following cases:
1. The represented person agrees;
2. The represented person is informed and does not object within a reasonable period;
3. The represented person is at fault, leading the person who participated in the transaction to be unaware or unable to know that the representative has established and executed a civil transaction with them that is beyond the scope of the representative’s authority.
- In the case where a civil transaction is established and executed by a representative beyond the scope of representation, do not create rights or obligations for the represented person regarding the part of the transaction established and executed beyond the scope of representation. In such cases, the representative must fulfill obligations to the person they transacted with regarding the part of the transaction beyond the scope of representation, unless the person transacting was aware or should have been aware of the exceeding of the scope of representation but still proceeded with the transaction.
- A person who has transacted with a representative has the right to unilaterally terminate the execution or cancel the civil transaction for the part exceeding the scope of representation or the entire civil transaction and request compensation for damages, except in cases where that person knows or should know about the exceeding of the scope of representation but still transacts or in cases pursuant to point a, clause 1 of this Article.
- In the case where the representative and the person transacting with the representative intentionally establish and execute a civil transaction beyond the scope of representation, causing damage to the represented person, they shall be jointly responsible for compensation.
Thus, the representative of the enterprise is only allowed to perform rights and obligations within the scope of authorization as specified in the regulations above. In the event that the enterprise representative abuses their position beyond their authority, committing illegal acts that cause harm to others, they may be subject to legal penalties according to the law. Above are the details surrounding the topic of enterprise representatives. To receive support as well as to understand information and legal regulations regarding enterprise representatives, you can contact NPLaw for consultation with a team of experienced lawyers and legal experts.
