In the course of organizing and operating an enterprise, having multiple legal representatives provides greater flexibility in the allocation of management responsibilities, execution of transactions, and handling of corporate affairs. However, this model also requires a clear delineation of authority, responsibilities, and coordination mechanisms among the legal representatives. If the Charter does not clearly specify such matters, the enterprise may face legal risks where multiple persons concurrently have the authority to represent the enterprise. Therefore, what should enterprises with multiple legal representatives pay attention to in order to minimize disputes and legal risks?

1. Legal regulations applicable to enterprises with multiple legal representatives

Under Clause 2, Article 12 of the Law on Enterprises 2020, a limited liability company and a joint-stock company may have one or more legal representatives. The enterprise must specify in its Charter the number, titles, rights, and obligations of each legal representative.

Notably, where the Charter does not clearly delineate the rights and obligations among the legal representatives, each legal representative shall be deemed to have full authority to represent the enterprise before third parties. At the same time, all legal representatives shall bear joint and several liability for damage caused to the enterprise in accordance with civil law and other relevant laws.

For a joint-stock company, where there is more than one legal representative, attention must also be paid to Clause 2, Article 137 of the Law on Enterprises 2020 concerning the titles of legal representatives. Accordingly, where the company has more than one legal representative, the Chairperson of the Board of Directors and the Director/General Director shall, by operation of law, be legal representatives of the company.

2. Relevant responsibilities and obligations

Under Clause 2, Article 12 of the Law on Enterprises 2020, an enterprise with multiple legal representatives should establish clear provisions in its Charter and internal authorization regulations. For example, the enterprise may assign one legal representative to be responsible for transactions and financial matters and another for human resources or investment activities. Such allocation of authority should clearly determine the scope of authority to execute contracts and transactions, work with competent state authorities, and represent the enterprise in legal proceedings.

In addition, under Clause 1, Article 13 of the Law on Enterprises 2020, a legal representative must exercise their rights and perform their obligations honestly, diligently, and to the best of their ability to protect the legitimate interests of the enterprise. A legal representative must not abuse their position, information, business secrets, business opportunities, or assets of the enterprise for personal gain. In particular, Clause 2, Article 13 of the Law on Enterprises 2020 provides that a legal representative shall bear personal liability for damage caused to the enterprise as a result of a breach of their responsibilities.

Furthermore, an enterprise must ensure that at least one legal representative resides in Vietnam. Where only one legal representative residing in Vietnam remains and such person leaves Vietnam, they must grant a written authorization to another individual residing in Vietnam to exercise the rights and perform the obligations of the legal representative. The authorizing person shall remain responsible for the exercise of the rights and performance of the obligations that have been authorized, in accordance with Clause 3, Article 12 of the Law on Enterprises 2020.

3. Notes and recommendations for enterprises and legal representatives

An enterprise should review and amend its Charter before appointing multiple legal representatives, particularly with respect to authority to execute contracts, high-value transactions, operate bank accounts, manage and use the corporate seal, represent the enterprise in legal proceedings, and conduct transactions with state authorities.

When changing its legal representative(s), the enterprise must carry out the procedures for registration of changes in accordance with the laws on enterprise registration. The required documents and competent decision-making authority depend on the type of enterprise and whether the change results in an amendment to the contents of the Charter.

In practice, having multiple legal representatives does not necessarily mean that each representative has equal authority in all circumstances. Therefore, the clearer the allocation of authority, the greater the ability to minimize the risks of transactions being conducted beyond the authorized scope, internal disputes, and joint and several liability among the legal representatives.

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