What is a Legal Representative? Latest Regulations in the 2015 Civil Code

Legal representation arises when an individual, acting as a legal representative on behalf of and for the benefit of another person or organization, establishes and executes civil transactions within the scope of their authority as a legal representative. This legal representation can be undertaken on behalf of individuals or organizations. Let INTER JUSTICE help you understand what a legal representative is according to the original provisions of the Civil Code, as well as explore the role of the legal representative of an enterprise under the current Enterprise Law.

Latest Regulations in the 2015 Civil Code

The 2015 Civil Code stipulates regulations regarding representation from Article 134 to Article 143 as follows: 

Article 134. Representation

Representation means a person (hereinafter referred to as the representative) acting in the name and for the benefit of another person (hereinafter referred to as the principal) enters into and performs a civil transaction within the scope of representation.

Each natural or juridical person may enter into and/or perform civil transactions through a representative. A natural person may not allow another person to represent him/her; if the law provides for that they must personally enter into and perform such transaction.

The representative, if required by law, must have legal personality and/or legal capacity in accordance with the transactions that he/she enters into and performs.

Article 135. Basis for establishment of representation rights

Representation rights shall be established according to a power of attorney between a principal and a representative (hereinafter referred to as authorized representation); according to a decision of a competent authority, a charter of a juridical person or as prescribed by law (hereinafter referred to as legal representation). 

Article 136. Legal representatives of natural persons

The father and/or mother with respect to a minor.

The guardian with respect to a ward. The guardian of a person with limited cognition and behavior control is a legal representative if appointed by a court.

The person appointed by a court in case where it is not able to determine the representative prescribed in Clause 1 and Clause 2 of this Article.

The person appointed by a court with respect to a person with limited legal capacity.

Article 137. Legal representatives of juridical persons

Legal representatives of juridical persons include:

(a) The person appointed by the juridical person according to its charter;

(b) The person competent to represent as prescribed by law;

(c) The person appointed by a court during the proceedings at the court.

Each juridical person may have multiple legal representatives and each representative is entitled to represent the juridical person as prescribed in Articles 140 and 141 of this Code.

Article 138. Authorized representatives

Each natural or juridical person may authorize another natural or juridical person to enter into and perform a civil transaction.

Members of a household, co-operative group or a non-juridical person may agree to authorize another natural or juridical person to enter into and perform a civil transaction related to their common property.

A person aged from fifteen years to below eighteen years may be an authorized representative, except where the law provides for that the civil transaction must be entered into and performed by a person who has reached eighteen years of age.

Article 139. Legal consequences of representative acts

A civil transaction entered into and performed with a third person by a representative in accordance with his/her scope of authorization shall give rise to rights and obligations of the principal.

The representative is entitled to enter into and/or perform necessary acts to attain the objectives of the authorization.

In case where a representative still enters into or performs a civil transaction although he/she knew or should know the establishment of authorization due to misunderstanding, deception, threat or compulsion, such civil transaction shall not give rise to rights and obligations of the principal, except for the case that the principal knew or should know such misunderstanding, deception, threat or compulsion without any objection.

Article 140. Term of representation

The term of representation shall be determined according to a power of attorney, a decision of a competent authority, and a charter of a juridical person or as prescribed by law.

If it fails to determine the term of representation prescribed in Clause 1 of this Article, the term of representation shall be determined as follows:

(a) If the representation right is determined according to a specific civil transaction, the time limit for representation shall be determined until the time of termination of such civil transaction;

(b) If the representation right is not determined according to a specific civil transaction, the term of representation is 1 year, from the time of arising representation right.

The authorized representation shall terminate in any of the following cases:

(a) Upon an agreement;

(b) Upon expiry of the term of authorization;

(c) Upon completion of the authorized tasks;

(d) The principal or the representative unilaterally revokes the authorization;

(e) The principal or the representative being natural person dies; the principal or the representative being juridical person ceases to exist;

(f) The representative does not meet the conditions prescribed in Clause 3 Article 134 of this Code;

(g) Upon another basis that causes the failure of the representation.

The legal representation shall terminate in any of the following cases:

(a) The principal being natural person becomes an adult or has his/her legal capacity restored;

(b) The principal being person dies;

(c) The principal being juridical person ceases to exist;

(d) Upon another basis as prescribed in this Code and relevant laws.

Article 141. Scope of representation

Each representative may only enter into and/or perform civil transactions within his/her scope of representation according to any of the following bases:

(a) The decision of the competent authority;

(b) The charter of the juridical person;

(c) Contents of authorization;

(d) Other regulations as prescribed by law.

If it fails to determine the specific scope authorization prescribed in Clause 1 of this Article, the legal representative has the right to enter into and perform all civil transactions in the interests of the principal, unless otherwise prescribed by law.

A natural or juridical person may represent multiple natural or juridical persons but he/she/it may not, on behalf of the principal, enter into and perform a civil transaction with him/her/it or with a third party that he/she/it also acts as a representative therefor, unless otherwise prescribed by law.

The representative must inform the parties of the scope of his/her representation.

Article 142. Consequences of civil transactions entered into and performed by unauthorized persons

A civil transaction entered into and performed by an unauthorized representative shall not give rise to rights and obligations of the principal, except for any of the following cases:

(a) The principal recognizes the transaction;

(b) The principal knows it without any objection within an appropriate time limit;

(c) It is the principal’s fault that the other party does not know or is not able to know that the person entering into and performing the civil transaction therewith was unauthorized.

If a civil transaction entered into and performed by an unauthorized person does not give rise to rights and obligations with respect to the principal, the unauthorized person must fulfill the obligations to the person with which he/she transacted, unless such person knew or should have known that the representative was unauthorized.

A person having transacted with an unauthorized person has the right to terminate unilaterally the performance of or to terminate the civil transaction entered into and to demand compensation for any damage, except where such person knew or should have known that the representative was unauthorized or the case prescribed in Point a Clause 1 of this Article.

If the unauthorized person and the other party in a civil transaction deliberately enter into and perform such transaction and thereby cause damage to the principal, they must jointly compensate for the damage.

Article 143. Consequences of civil transactions entered into and performed by representatives beyond scope of representation

A civil transaction entered into and performed by a representative beyond his or her scope of representation shall not give rise to rights and obligations of the principal with respect to that part of the transaction which exceeded the scope of representation, except for any of the following cases:

(a) The principal gives consent;

(b) The principal knows it without any objection within an appropriate time limit;

(c) It is the principal’s fault that the other party does not know or is not able to know that the person entering into and performing the civil transaction therewith was beyond his/her scope of representation.

If a civil transaction entered into and performed by a representative beyond his/her scope of representation does not give rise to rights and obligations of the principal with respect to that part of the transaction, the representative must fulfill the obligations owing to the person with which he/she transacted in respect of the part of transaction which is beyond the scope of representation, unless such person knew or should have known that the scope of representation was exceeded.

A person having transacted with such representative has the right to terminate unilaterally the performance of or to terminate the civil transaction with respect to that part which is beyond the scope of representation or with respect to the entire transaction and to demand compensation for any damage, except where such person knew or should have known that the scope of representation was exceeded or the case prescribed in Point a Clause 1 of this Article.

Where a person and a representative enter into and perform a civil transaction deliberately beyond the scope of representation of the representative and thereby cause damage to the principal, they shall be jointly liable to compensate for the damage. 

Legal Representative of an Enterprise

The current Enterprise Law stipulates regulations regarding the legal representative of an enterprise as follows: 

1. The enterprise’s legal representative is the person that, on behalf of the enterprise, exercises and performs the rights and obligations derived from the enterprise’s transactions, acts as the plaintiff, defendant or person with relevant interests and duties in court, arbitration, and performs other rights and obligations prescribed by law.
2. A limited liability company or joint stock company may have one or more than one legal representative. The enterprise’s charter shall specify the quantity, position, rights and obligations of its legal representatives. In case there are more than one legal representative, the charter shall specify the rights and obligations of each of them. Otherwise, each of the legal representatives shall fully represent the enterprise and take joint responsibility for any damage to the enterprise as prescribed by civil laws and relevant laws. 
3. An enterprise shall have at least one legal representative residing in Vietnam. Whenever this representative leaves Vietnam, he/she has to authorize another Vietnamese resident, in writing, to act as the legal representative, in which case the authorizing person is still responsible for the authorized person’s performance.
4. In case the authorizing person has not returned to Vietnam when the letter of authorization mentioned in (3) expires and does not have any further actions:
5. a) In case the enterprise is a sole proprietorship, the authorized person shall continue acting as the enterprise’s legal representative until the authorizing person returns;
6. b) In case the enterprise is a limited liability company, joint stock company or partnership, the authorized person shall continue acting as the enterprise’s legal representative until the authorizing person returns or until the enterprise’s owner, Board of Members/Partners or Board of Directors designates another legal representative.
7. In case the only legal representative of an enterprise is not present in Vietnam for more than 30 days without authorizing another person to act as the enterprise’s legal representative, or is dead, missing, facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, has difficulty controlling his/her own behaviors, is banned by the court from holding certain positions or doing certain works, the enterprise’s owner, Board of Members/Partners or Board of Directors shall appoint another legal representative, except for the cases specified in Clause 6 of this Article.
8. In a two-member limited liability company, if the member who is the company’s legal representative is  dead, missing, facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, making getaway; has limited legal capacity or is incapacitated, has difficulty controlling his/her own behaviors, is banned by the court from holding certain positions or doing certain works, the other member shall obviously assume the position of the company’s legal representative until the Board of Members issues a new decision on the company’s legal representative.
9. The court and other proceeding authorities are entitled to appoint the legal representative who participates in proceedings as prescribed by law.

Article 13. Responsibilities of the enterprise’s legal representative

1. An enterprise’s legal representative shall:

a) Exercise and perform his/her rights and obligations in an honest and prudent manner to protect the enterprise’s lawful interests;

b) Be loyal to the enterprise’s interests; not abuse his/her power and position or use the enterprise’s information, secrets, business opportunities and assets for personal gain or serve any other organization’s or individual’s interests;

c) Promptly and fully provide the enterprise with information about the enterprises that he/she or his/her related person owns or has shares/stakes in as prescribed in this Law.

2. The enterprise’s representative shall be personally responsible for any damage to the enterprise within the limits of responsibilities specified in Clause 1 of this Article.

Article 14. Authorized representatives of the owner/members/partners/shareholders that are organizations

1. Authorized representatives of the owner/members/partners/shareholders that are organizations shall be authorized in writing by the owner/members/partners/shareholders in accordance with this Law.

2. Unless otherwise prescribed by the charter, the designation of the authorized representative shall comply with the following regulations:

a) An organization that is a member of a multiple-member limited liability company and holds at least 35% of charter capital may designate up to 03 authorized representatives;

b) An organization that is a shareholder of a joint stock company and holds at least 10% of ordinary shares may designate up to 03 authorized representatives.

3. In case the owner/members/partners/shareholders designate more than one authorized representative, the holding represented by each of them shall be specified. Otherwise, the total holding shall be equally divided among the authorized representatives.

4. The document designating the authorized representative shall be informed to the company, be effective on the date it is received by the company and contain the following information:

a) Names, enterprise identification (EID) numbers, headquarters addresses of the owner/members/partners/shareholders;

b) Quantity of authorized representatives and their holdings;

c) Full name, mailing address, nationality, legal document number of each authorized representative;

d) The beginning date and duration of authorization of each authorized representative;

(dd) Full names and signatures of the legal representatives of the owner/members/partners/shareholders and of the authorized representatives.

5. An authorized representative shall satisfy the following requirements:

a) The authorized representative is not an entity specified in Clause 2 Article 17 of this Law;

b) Members/partners/shareholders of state-owned enterprises prescribed in Point b Clause 1 Article 88 of this Law must not designate a relative of the executive and the person having the power to designate the executive as representative of another company;

c) Other requirements specified in the company’s charter.

Article 15. Responsibilities of authorized representatives of the owner/members/partners/shareholders that are organizations

1. Authorized representatives of the owner/members/partners/shareholders shall exercise and perform their rights and obligations in accordance with this Law. All limits imposed by the owner/members/partners/shareholders to the authorized representatives’ performance at the Board of Members/Partners or General Meeting of Shareholders shall not apply to any third party.

2. Authorized representatives have the responsibility to attend all meetings of the Board of Members/Partners or General Meeting of Shareholders; exercise and perform the authorized rights and obligations in an honest and prudent manner to protect lawful interest of the owner/members/partners/shareholders that designated them.

3. Authorized representatives shall be responsible to the owner, members/partners/shareholders for fulfillment of the responsibilities specified in this Article. The owner, members/partners/shareholders that designate these authorized representatives shall be responsible to third parties for performance of these authorized representatives. 

The above information answers the question “what is a legal representative?”, as stipulated in the original Civil Code as well as the current Enterprise Law. If you have further questions or require additional consultation on legal representation, please contact Nam Viet Law Company for assistance and clarification.

The above information clarifies the concept of legal representation, based on the provisions of the Civil Code and the current Enterprise Law. If you have any further questions or require more detailed consultation on this matter, please contact INTER JUSTICE for advice and clarification.