In today’s modern business environment, identifying the legal representative of a joint stock company plays a vital role in conducting legal transactions and safeguarding the company’s lawful rights and interests. The legal representative is the individual authorized to represent the company in external relations and takes responsibility for the company’s legal matters.

The following article by NPLaw provides a detailed analysis of the current legal regulations governing the legal representative of a joint stock company.

I. Role of the legal representative of a joint stock company

The legal representative of a joint stock company plays an extremely important role in the company’s operations.

  • Representing the company in legal transactions: The legal representative has the authority to represent the company in signing contracts, agreements, and conducting transactions with other organizations and individuals. It is the most fundamental role of the legal representative, as all lawful actions of the company are conducted through such an individual. The execution of contracts and transactions must be conducted in compliance with the company’s procedures and charter.
  • Taking legal responsibility for the company’s operations: According to legal regulations, the legal representative is responsible for the company’s legal acts, including compliance with tax obligations, protection of employees’ rights and interests, and adherence to environmental regulations. Where the company violates the law, the legal representative may be subject to legal liability, particularly where their actions cause damage to third parties.
  • Leading and managing the company: In many cases, the legal representative also plays a role in managing and operating the company, ensuring that the company operates efficiently and in the right direction. Such an individual may decide on important company matters such as development strategies, use of company assets, and appointment of other managerial positions.
  • Representing the company before state authorities and in legal proceedings: The legal representative acts on behalf of the company in dealings with state authorities, including tax filings, registration procedures, dispute resolution, and participation in legal proceedings where applicable. They are also responsible for ensuring compliance with financial reporting, tax reporting, and other administrative obligations to the State.
  • Protecting the rights and interests of shareholders and the company: The legal representative is responsible for safeguarding the lawful rights and interests of shareholders, as well as protecting the company’s assets and interests. They must make decisions that serve the company’s common interests while ensuring transparency and adequate disclosure to shareholders.
  • Implementing decisions of the Board of Directors: Although the legal representative has decision-making authority in many matters, major decisions, such as changes in corporate strategy, senior personnel appointments, or significant investments, generally require approval from the Board of Directors. The legal representative is responsible for implementing such decisions and reporting outcomes to the Board of Directors.

II. Regulations on the Legal Representative of a Joint Stock Company

1. Who is the legal representative of a joint stock company?

Pursuant to Clause 1, Article 12 of the Law on Enterprise 2020, the legal representative of an enterprise is an individual who represents the enterprise in exercising rights and obligations arising from the enterprise’s transactions; represents the enterprise as a requester in civil matters, plaintiff, defendant, or a person with related rights and obligations before arbitration or courts; and exercises other rights and obligations as prescribed by law.

Accordingly, the legal representative of a joint stock company is the individual who represents the company in exercising rights and obligations arising from its transactions and represents the company before arbitration and courts, as well as executing other rights and obligations in accordance with law.

2. Responsibilities of the legal representative of a joint stock company

Pursuant to Article 13 of the Law on Enterprise 2020, the legal representative of an enterprise has the following responsibilities to:

  • Exercise assigned rights and obligations honestly, prudently, and in the best interests of the enterprise;
  • Remain loyal to the interests of the enterprise; not to abuse position or authority, and not to use information, know-how, business opportunities, or other assets of the enterprise for personal gain or for the benefit of other organizations or individuals;
  • Promptly, fully, and accurately notify the enterprise of any enterprises in which they or their related persons hold ownership, shares, or capital contributions in accordance with the Law on Enterprise 2020.
  • The legal representative takes personal liability for damage caused to the enterprise due to violations of the above responsibilities.

3. Number of legal representatives of a joint stock company

Pursuant to Clause 2, Article 12 of the Law on Enterprise 2020, a joint stock company may have one or more legal representatives. The company charter shall specifically stipulate the number, managerial titles, and rights and obligations of the legal representative(s).

Where the company has more than one legal representative, the charter must clearly define the rights and obligations of each legal representative. If the charter does not clearly allocate such rights and obligations, each legal representative shall be deemed a fully authorized representative of the enterprise before third parties; all legal representatives shall take joint liability for damages caused to the enterprise in accordance with civil law and other relevant regulations.

Additionally, pursuant to Clause 2, Article 137 of the Law on Enterprise 2020:

  • Where the company has only one legal representative, the Chairman of the Board of Directors or the Director/General Director shall be the legal representative of the company.
  • Where the charter does not provide otherwise, the Chairman of the Board of Directors shall be the legal representative.
  • Where the company has more than one legal representative, the Chairman of the Board of Directors and the Director or General Director shall automatically be legal representatives of the company.

III. Questions regarding the legal representative of a joint stock company

1. Is the legal representative required to always be present in Vietnam?

Pursuant to Clause 3, Article 12 of the Law on Enterprises 2020, where only one legal representative resides in Vietnam, such person must authorize in writing another individual residing in Vietnam to execute the rights and obligations of the legal representative before leaving Vietnam.

Accordingly, the legal representative is not required to always be present in Vietnam; however, if they are the sole remaining legal representative residing in Vietnam and leave the country, a written authorization is required.

2. Dossier for change of legal representative of a joint stock company 

Pursuant to Clause 1, Article 50 of Decree No. 01/2021/ND-CP, the dossier for changing the legal representative of a joint stock company includes:

  • Notification of change of legal representative;
  • Copy of personal legal documents of the new legal representative;
  • Resolution and copy of minutes of the General Meeting of Shareholders regarding the change of legal representative, where such change results in amendments to the company charter;
  • Resolution/decision and copy of minutes of the Board of Directors’ meeting, where the change of legal representative does not result in amendments to the charter other than changes to the name and signature of the legal representative as prescribed in Article 24 of the Law on Enterprise 2020.

3. May the legal representative of a joint stock company be a person who is not a member of the Board of Directors?

Pursuant to Article 137 of the Law on Enterprise 2020, a joint stock company must have at least one legal representative, who may be the Director (General Director) or a member of the Board of Directors. However, the legal representative is not required to be a member of the Board of Directors and may be another individual, such as the Director or General Director of the company.

4. How are the rights and obligations of the legal representative regulated under current enterprise law?

Currently, the Law on Enterprise does not provide detailed provisions on the specific rights and obligations of the legal representative of a joint stock company, but only stipulates general responsibilities under Article 13 of the Law on Enterprise 2020. In addition, pursuant to Clause 2, Article 12 of the Law on Enterprise 2020, the specific rights and obligations of the legal representative shall be stipulated in the company charter.

5. How are rights and responsibilities allocated when a joint stock company has multiple legal representatives?

Pursuant to Clause 2, Article 12 of the Law on Enterprise 2020, where a company has more than one legal representative, the company charter must specify the rights and obligations of each legal representative.

Where such allocation is not clearly provided, each legal representative shall be deemed a fully authorized representative before third parties, and all legal representatives shall take joint liability for damage caused to the enterprise in accordance with civil law and other relevant legal provisions.

IV. Legal consulting services on legal representatives of joint stock companies

The above information is provided by NP Law to assist clients with matters relating to the legal representative of joint stock companies. Should you have any questions regarding the above issues or other legal matters, please contact NP Law for direct consultation and guidance.