LEGAL REPRESENTATIVE KEPT IN TEMPORARY DETENTION, WHO IS ALLOWED TO SIGN CONTRACT?

The legal representative of an enterprise is an individual who represents the enterprise to exercise the rights and obligations arising in the operation of the enterprise. However, many enterprises have only one legal representative. In this case, if the representative is kept in temporary detention, who will have the authority to sign contracts and transactions to maintain the company’s operations?

1. Who is the legal representative of the company?

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 before in court, arbitration, and performs other rights and obligations prescribed by law.

Limited liability companies and joint stock companies may have one or more than one legal representatives.

2. Title of legal representative?

a.         For a multiple-member limited liability company, the company must have at least one legal representative who holds one of the titles of the Chairman of the Board of Members or the Director or General Director.

Unless otherwise provided in the company’s charter, the chairman of the Board of Members of the company’s president shall be the legal representative of the company.

b.         For a single-member limited liability company owned by an organization, the company shall have at least one legal representative who holds the title of President of the Board of Members, the company’s President or Director/General Director. Unless otherwise prescribed by the company’s charter, the President of the company or President of the Board of Members shall be the company’s legal representative.

c.         For a single-member limited liability company owned by an individual, a company’s owner shall be the President who may concurrently hold the position of Director/General Director or hire another person as the Director/General Director.

d.         For joint stock company, if the company has only one legal representative, the President of the Board of Directors or the Director/General Director shall be the legal representative.

The President of the Board of Directors shall be the company’s legal representative unless otherwise prescribed by the company’s charter.

 If the company has more than one legal representative, the President of the Board of Directors and the Director/General Director shall be the company’s legal representatives.

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3. Who will sign the contract when the legal representative is kept in temporary detention?

For enterprises with only one legal representative:

a.         The enterprise’s owner, Board of Members/Partners or Board of Directors shall appoint another legal representative in case this person is:

–      not present in Vietnam for more than 30 days without authorizing another person to act as the enterprise’s legal representative; or

–      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.

b.         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.

Then 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.