Legal Representative in Vietnam: Complete Guide for Foreign Investors and Business Owners

A legal representative in Vietnam is the critical bridge between a corporate entity and the national legal system, serving as the face, voice, and authorized signatory of a company. Whether you are a foreign investor planning to enter the Vietnamese market or a local business owner restructuring your enterprise, understanding the role, risks, and regulations surrounding the legal representative is not just a formality - it is a strategic necessity. This role is a core component of any legal entity structure in Vietnam.

Who is the legal representative in Vietnam?

The Legal representative in Vietnam is an individual who acts on behalf of the enterprise to exercise rights and perform obligations arising from the enterprise’s transactions. They represent the company in arbitration proceedings, courts, and before other government authorities. Under the Enterprise Law 2020, the legal representative is not merely a title holder; they are the person legally responsible for the company's compliance. Their signature binds the company to contracts, financial obligations, and administrative duties.

It is crucial to distinguish between the company owner (shareholder/member) and the legal representative. While they can be the same person, they play distinct roles:

• Owners provide capital and vote on major strategic directions.
• Legal representatives execute daily operations and ensure the company functions within the bounds of Vietnamese law.

Which businesses are required to have a legal representative in Vietnam?

Every corporate entity operating within the territory of Vietnam must have at least one legal representative. The specific requirements may vary slightly depending on the corporate structure.

4 businesses are required to have a legal representative in Vietnam

Limited liability companies (LLCs)

For both Single-member LLCs and Multi-member LLCs, a legal representative is mandatory. In an LLC, the legal representative is responsible for managing the daily business operations and implementing the decisions of the Members' Council or the Company President.

Joint stock companies (JSCs)

Joint Stock Companies often have a more complex management structure. A JSC can have one or more legal representatives. If the company charter does not specify, the Chairman of the Board of Directors or the General Director usually assumes this role.

Foreign-invested enterprises (FIEs)

Foreign-invested Enterprises are subject to strict scrutiny regarding their legal representation. The legal representative of an FIE acts as the primary point of contact for the Department of Planning and Investment (DPI) and tax authorities.

Representative offices/branches

While not a separate legal entity like a company, Representative offices and branches must appoint a "Head of Representative Office" or "Head of Branch." This individual functions similarly to a legal representative regarding the specific scope of that office's operations.

What titles can be used for a legal representative in Vietnam?

The title of the legal representative often reflects their management role within the company. However, the law allows for flexibility depending on the company charter.

Common titles

In the business registration license (ERC), the legal representative typically holds one of the following titles:

• Director/General director: The most common title, implying executive management power.
• Chairman of the board of directors: Common in JSCs, representing higher-level governance.
• Chairman of the company: Often used in Single-member LLCs.
• Member of the board of members: Used in Multi-member LLCs.

Can a company have multiple legal representatives?

Yes. The Enterprise Law 2020 allows Limited Liability Companies and Joint Stock Companies to have multiple legal representatives.

Applicable legal regulations

If a company has multiple legal representatives, the Company Charter must clearly specify the rights and obligations of each representative. For example, one representative may handle technical operations while another manages financial transactions.

Advantages and disadvantages

• Advantages: It ensures business continuity. If one representative is traveling or incapacitated, the other can sign urgent documents. It also creates a system of checks and balances. This is especially useful when managing complex capital structures involving multiple stakeholders.
• Disadvantages: It can lead to confusion regarding authority if the charter is vague. There is also a risk of conflicting decisions between representatives.

Cases where multiple representatives should be applied

This structure is highly recommended for Foreign-invested enterprises (FIEs) where the primary owner resides overseas. You can appoint one representative residing in Vietnam (to handle daily admin and compliance) and one abroad (to maintain strategic control).

Rights and obligations of the legal representative in Vietnam

The position comes with significant power but arguably heavier responsibilities.

Rights of the legal representative

The legal representative is empowered to perform critical actions, including:

• Signing contracts: Executing commercial contracts, labor agreements, and partnership deals.
• Representing the company before the law: Acting as the plaintiff or defendant in litigation and arbitration.
• Working with government authorities: Signing tax returns, applying for licenses, and handling administrative procedures with the Department of Planning and Investment.
• Internal management: Issuing internal regulations and recruiting key personnel (depending on the charter).

4 Rights of the legal representative in Vietnam

Legal obligations and responsibilities

To protect shareholders and third parties, the law imposes strict duties on the legal representative:

Civil liability

The representative must exercise their delegated rights and duties honestly, diligently, and to the best of their ability to maximize the legal interests of the enterprise. They must be loyal to the interests of the enterprise and its owners. If they breach this duty (e.g., diverting business opportunities to themselves), they are liable to pay compensation for damages.

Administrative liability

If the company commits administrative violations (such as late tax filing, improper employment practices, or licensing issues), the legal representative is the individual summoned by authorities to resolve the issue.

Criminal liability

In severe cases, such as tax evasion, smuggling, fraud, or gross negligence leading to significant financial loss, the legal representative can face criminal prosecution. This is why "nominee" services must be handled with extreme professional care.

Requirements to become a legal representative in Vietnam

Selecting a representative is not just about choosing a manager; it is about finding someone who meets specific legal criteria.

General conditions

To become a legal representative, an individual must:

• Age requirements: Be at least 18 years old.
• Legal capacity: Have full civil act capacity.
• Not subject to statutory prohibitions: They cannot be a person currently serving a prison sentence, facing criminal prosecution, or banned from practicing business by a court decision. Furthermore, they cannot be a state official or a commissioned officer in the people's armed forces.

Can foreigners be legal representatives?

Yes, foreigners can be legal representatives in Vietnam. There is no restriction on nationality. However, there are practical considerations:

• Residency: While they don't have to be Vietnamese, at least one legal representative must reside in Vietnam (see the next section).
• Visa and work permit: A foreign legal representative generally requires a Work permit or a Work permit exemption certificate. Investing a certain amount of capital may also qualify them for an Investor Visa (DT Visa) or a Temporary Residence Card (TRC), facilitating their stay.

Understanding the latest visa and employment permits regulations is crucial for a smooth transition

Is it mandatory for the legal representative to reside in Vietnam?

This is one of the most frequently asked questions by foreign investors. Let’s explore the mandatory requirement for the legal representative to reside in Vietnam

Residency regulations

According to the Enterprise Law, an enterprise must ensure that there is always at least one legal representative residing in Vietnam. If the company has only one legal representative, that person must reside in Vietnam. If they are a foreigner, they must have a valid residential address (registered with the local police).

Absence from Vietnam

If the sole legal representative residing in Vietnam leaves the country for more than 30 days, they must authorize another person in writing to perform their rights and obligations.

Authorization obligations upon departure

The authorization must be legally valid. However, even with authorization, the authorizing legal representative remains responsible for the performance of the rights and obligations carried out by the authorized person. If the representative does not return after the authorization expires and no new representative is appointed, the authorized person continues to perform the duties until a formal replacement is made.

Responsibilities when the legal representative is absent or absconds

Business continuity is vital. The law provides mechanisms for when a representative goes missing or fails to perform duties.

Legal consequences of absence

If a company lacks a resident legal representative (e.g., the sole rep leaves Vietnam without authorization or "absconds"), the company is considered to be in violation of the law. This can lead to:

• Inability to sign tax reports (leading to tax penalties).
• Inability to operate bank accounts.
• Blocking of the company's tax code.

How the company is affected

Without a representative, the company effectively becomes paralyzed. Partners cannot sign contracts, employees cannot be legally paid, and the company cannot respond to state queries.

Lawful solutions and handling measures

If the legal representative is absent for more than 30 days without authorization, or is dead, missing, or detained:

• The Owner/Board of members/Board of directors must immediately convene a meeting to appoint a new legal representative.
• The dossier for changing the legal representative must be submitted to the Department of Planning and Investment within 10 days of the decision.

Changing the legal representative in Vietnam

Changing a legal representative is a common administrative procedure, but it requires precision to avoid business disruption.

When is it necessary to change the legal representative?

• Changes in business strategy: The company hires a new CEO or Director.
• Violations: The current representative breaches the charter or the law.
• Resignation: The current representative wishes to resign.
• Non-residency: The current representative moves out of Vietnam permanently.

Procedures for changing the legal representative

To officially change the representative, the company must submit a dossier to the business registration office.

Required documents

1. Notice of change of the legal representative (standard form).
2. Minutes of the meeting (of the Board of Members or Shareholders) regarding the change.
3. Resolution/Decision of the company owner or board.
4. Copy of personal identification papers (ID/Passport) of the new legal representative.
5. Authorization letter

Any changes to the representative may also require an update to the company's Articles of Association to ensure internal consistency

Required documents for changing the legal representative

Processing time

Typically, the Department of Planning and Investment processes the request within 3 working days upon receiving a valid dossier.

Important considerations during implementation

• Tax obligations: Ensure the old representative has fulfilled all personal income tax obligations before leaving.
• Bank updates: Immediately after receiving the new Business Registration Certificate, you must update the signatory information with the company's bank to unfreeze funds.
• Handover: A strict internal handover minute regarding assets, seals, and documents between the old and new representative is essential to define liability boundaries.

Common legal risks related to the legal representative

Failure to manage the role of the legal representative can lead to severe risks for the company owners.

• Signing contracts beyond authorized scope: If a representative signs a contract that exceeds their authority (as defined in the Charter) or signs with a related party without disclosure, the contract may be declared invalid.
• Failure to fully understand tax obligations: Foreign representatives often underestimate Vietnamese tax laws. If the company owes tax, the legal representative may be banned from leaving Vietnam until the debt is paid.
• Personal Liability vs. Corporate Liability: Owners often mistake limited liability for total immunity. If the legal representative uses company assets for personal gain, the "corporate veil" can be pierced, leading to personal financial liability.

Frequently asked questions

This part will investigate the most frequently asked questions below. These questions address common concerns raised by both local and foreign investors when establishing and operating a company in Vietnam.

Does the legal representative have to be the company owner?

No. The legal representative can be the owner, a shareholder, or a hired employee (e.g., a hired CEO).

Is it possible to hire a legal representative?

Yes. Many foreign investors hire a professional "Nominee Director" or legal representative to satisfy the residency requirement or to maintain anonymity. However, this requires a tight legal agreement to protect the beneficial owner.

To what extent is the legal representative liable when the company has tax debts?

If the company has outstanding tax debts, the enforcement measure often applied by Vietnam Customs and Tax authorities is the suspension of exit. This means the legal representative cannot leave Vietnam until the tax debt is resolved.

Is the legal representative required to be a Vietnamese national?

No. Foreign nationals can hold this position. However, they must comply with immigration and labor laws (Work Permits/Visas) and satisfy the residency requirement (at least one rep must live in Vietnam).

Navigating the regulations surrounding the Legal Representative in Vietnam requires local expertise and legal precision. At G2B, we provide comprehensive solutions to ensure your company remains compliant while you focus on growth. Our Vietnam Incorporation Service includes expert advice on appointing the right legal representative and navigating all post-incorporation requirements. Contact G2B for consultation on how to stay compliant or set up a company in Vietnam today.