Authorized representatives of FDI companies in Vietnam

The authorized representative of the FDI company is an individual authorized in writing on behalf of the owner, member, or shareholder to exercise the rights and obligations prescribed by the Law on Enterprises. As currently applicable law, what are the rights and obligations of authorized representatives of FDI companies in Vietnam? Viet An Law will clarify the above issue through the article below.

Regulations on authorized representatives of FDI companies in Vietnam

Standards for authorized representatives of FDI companies

According to Clause 5, Article 14 of the Law on Enterprises 2020, the standards of an authorized representative are as follows:

Cases where the authorized representative is not qualified include:

• State agencies and units of the people’s armed forces use state assets to establish businesses to make profits for their agencies and units;
• Officials, civil servants, public employees;
• Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, police workers in agencies and units of the Vietnam People’s Public Security, except for those appointed as authorized representatives to manage the State’s capital contribution in enterprises or to manage state-owned enterprises;
• Executives and managers of state-owned enterprises, except for those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;
• Minors; persons with limited civil act capacity; persons who have lost civil act capacity; persons with difficulty in cognition and behavior control; organizations without legal status;
• People who are being prosecuted for criminal liability, detained, serving a prison sentence, serving an administrative measure at a compulsory drug rehabilitation facility, a compulsory education facility, or are prohibited by the Court from holding a position, practicing a profession, or doing certain work; other cases as prescribed by law.
• In case the Business Registration Authority requests, the person registering to establish a business must submit a Criminal Record to the Business Registration Authority;
• An organization is a commercial legal entity prohibited from doing business or operating in certain fields according to the provisions of the Penal Code.

Number of authorized representatives of FDI companies

In case the Company Charter does not provide otherwise, the appointment of an authorized representative shall be carried out in accordance with the following provisions:

• An organization that is a member of a limited liability company with two or more members and owns at least 35% of the charter capital may authorize up to 03 authorized representatives;
• An organization that is a shareholder of a joint stock company and owns at least 10% of the total number of common shares may authorize up to 03 authorized representatives.

Note: In case the owner, member, or shareholder of a company is an organization and appoints multiple authorized representatives, the capital contribution and number of shares for each authorized representative must be specifically determined. In case the owner, member, or shareholder of a company does not determine the capital contribution and number of shares for each authorized representative, the capital contribution and number of shares will be divided equally among all authorized representatives.

Responsibilities of an authorized representative

• The authorized representative, on behalf of the company’s owners, members, and shareholders, exercises the rights and obligations of owners, members, and shareholders at the Board of Members and General Meeting of Shareholders following the provisions of law.
• Any restrictions of the owner, member, or shareholder on the authorized representative in exercising the rights and obligations of the owner, member, or shareholder of the respective company at the Board of Members, General Meeting of Shareholders are not valid for third parties.
• The authorized representative is responsible for fully attending the meetings of the Board of Members and the General Meeting of Shareholders; exercising the authorized rights and obligations honestly, carefully, and to the best of his/her ability, protecting the legitimate interests of the owner, members, and shareholders who appoint the representative.
• The authorized representative is responsible to the owner, member, or shareholder who appoints the representative for any violation of the responsibilities prescribed by law. The owner, member, or shareholder who appoints the representative is responsible to a third party for any responsibilities arising in connection with the rights and obligations exercised through the authorized representative.

Content of authorization document of FDI company

Authorization document of legal representative

The authorization document of the legal representative of the enterprise must clearly state the scope of authorization, duration of authorization, and responsibilities of the relevant parties.

Authorization document of the representative of capital contribution

The content of the capital contribution management authorization document is as follows:

• Name, business registration number, and head office address of the owner, member, and shareholder;
• Number of authorized representatives and corresponding proportion of shares and capital contributions of each authorized representative;
• Full name, permanent address, nationality, Citizen Identification Card number, Passport, or other legal personal identification of each authorized representative;
• The respective term of authorization of each authorized representative; clearly stating the date of authorization;
• Full name and signature of the legal representative of the owner, member, shareholder, and authorized representative.

Note:

• In case the owner, member, or shareholder of a company is an organization and appoints multiple authorized representatives, the capital contribution and number of shares for each representative must be specifically determined. In case the owner, member, or shareholder of a company does not determine the capital contribution and number of shares for each authorized representative, the capital contribution and number of shares will be divided equally among the number of authorized representatives.
• The appointment of an authorized representative must be in writing, must be notified to the company, and is only effective for the company from the date the company receives the notification.

Can an authorized representative also be a legal representative?

The authorized representative and the legal representative are two independent entities.

Normally, when having the right to represent according to the law, that entity will not need the authorization to represent the company, but only those entities that do not have the right to represent will need the authorization mechanism from the company in civil law to be legally represented on behalf of the company.

However, the scope of the authorization will have to comply with the provisions of the company’s charter, and in some cases where the right to represent according to the law is limited, the company has the right to meet to decide to authorize them beyond the scope of representation recorded in the charter.

Above is the advice of Viet An Law on regulations on authorized representatives of FDI companies in Vietnam. If there are any other legal problems related to business representatives, please contact Viet An Law for more specific and detailed advice. Sincerely thank you!