The legal representative is a special and important entity associated with the development of the enterprise. Therefore, each enterprise needs to clearly understand the responsibilities of this entity. In this post, we will analyze the provisions on the responsibility of the legal representative.
1. Who is the legal representative?
The legal representative of enterprise means an individual who represents an enterprise to exercise the rights and perform the obligations arising from its transactions, and represents the enterprise in the capacity of a requester for settlement of civil cases, plaintiff, respondent or person with related interests or obligations before arbitration or court, and has other rights and obligations as prescribed by law.
Therefore, the legal representative is required to be an individual, although the enterprise may have the participation of an organization. In case an organization wants to become the legal representative of an enterprise of which it is a member, it can nominate an individual “representative” of itself to become the legal representative of the enterprise.
Each type of enterprise will have a different number of legal representatives, specifically:
- For a sole proprietorship: the owner of the sole proprietorship is the legal representative of the enterprise.
- For a partnership company: the number of legal representatives corresponds to the number of general partners because the general partners have the right to represent the law and the organization operates the day-to-day business of the partnership company.
- For limited liability companies and joint stock companies: there may be one or more legal representatives.
2. Responsibilities of the enterprise’s legal representative
The provisions on the responsibilities of the legal representative in the Law on Enterprise 2020 have not changed compared to the Law on Enterprise 2014, whereby the legal representative must still ensure that:
- To exercise and perform the assigned rights and obligations in an honest, prudent and best manner in order to guarantee the lawful interests of the enterprise;
- To be loyal to the interests of the enterprise; neither to abuse his/her title or position nor to use business information, know-how or opportunities or other assets of the enterprise for personal gain or for the interests of other organizations or individuals;
- To notify the enterprise in a timely, complete and accurate manner of other enterprises which he/she or his/her related party owns or in which he/she or his/her related party has shared or contributed capital amounts in accordance with this Law;
- Must authorize in writing another person residing in Vietnam to perform the rights and obligations of the legal representative when exiting Vietnam in case he/she is the only legal representative residing in Vietnam. In this case, the legal representative shall still be held responsible for the exercise and performance of the authorized rights and obligations;
- To bear personal liability for damage caused to the enterprise due to his/her breach of the above responsibilities.
This is the post “Responsibilities of the Enterprise’s legal representative”. We hope this article was useful to you.