A legal representative is the face of an enterprise, entrusted with the responsibility of management and decision-making. However, authority always goes hand in hand with responsibility. In this article, Viet An Law Firm provides an in-depth analysis of the personal liability of legal representatives in Vietnam.
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Pursuant to Article 13 of the Law on Enterprises 2020 and Clause 4, Article 1 of Law No. 76/2025/QH15, the responsibilities of a legal representative include:
ABC Construction Joint Stock Company, with Mr. Tran Van B as the legal representative, won a bidding package for a bridge construction project. During the project, in order to cut costs and accelerate progress, Mr. B directed the use of substandard materials inconsistent with the design documents and contract, while also bypassing mandatory quality inspection procedures.
As a result, shortly after being put into use, the bridge developed cracks, posed safety risks, and required major repairs, causing serious losses to the State budget and damaging the reputation of ABC Company.
In this case, Mr. Tran Van B seriously violated responsibilities under Article 13 of the Law on Enterprises 2020 and Clause 4, Article 1 of Law No. 76/2025/QH15. Specifically, Mr. B breached the duty of honesty and prudence by ordering the use of inferior materials, prioritizing cost-cutting over safety. His actions went against the lawful interests of the enterprise, causing significant financial and reputational damage. He also abused his position as legal representative to make wrongful decisions not aligned with the enterprise’s sustainable interests. Therefore, under the above laws, Mr. B must bear personal liability for all damages caused, including repair costs, contractual penalties, reputational losses, and legal expenses.
Pursuant to Article 12 of the Law on Enterprises 2020:
The enterprise’s legal representative is the person who, 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 the court, arbitration, and performs other rights and obligations prescribed by law.
An enterprise must ensure that at least one legal representative resides in Vietnam.
If the term of authorization expires while the legal representative has not returned to Vietnam and no other authorization is in place, or in other special cases under Clause 5, Article 12 of the Law on Enterprises 2020, the following applies:
For an LLC with two or more members, the Board of Members, the Chairperson of the Board of Members, or the Director/General Director may serve as the legal representative. If the charter does not specify, the Chairperson of the Board of Members is the legal representative.
The responsible person is the individual who owns, controls, or effectively exercises control over the enterprise, non-profit organization, or legal entity, and directly or indirectly manages its funds and assets.
The Board of Directors is the supreme governing body of a JSC. Members are elected or appointed by shareholders to represent their interests. Its key functions include: appointing executive management, overseeing operations, and making strategic decisions.
The above provides Viet An Law Firm’s analysis of the personal liability of legal representatives in Vietnam. For further legal support regarding the responsibilities of legal representatives or related corporate law issues, please contact Viet An Law Firm for detailed advice.
