The legal representative, directors and governance of an LLC and a joint stock company: residency, authority, organs, voting thresholds, minority rights and duties

The legal representative

The legal representative (người đại diện theo pháp luật) is the individual who binds the company: he or she signs contracts and filings, represents the company before the authorities, the courts and arbitral tribunals, and answers personally for breaches of duty. A company may have one or more legal representatives; the charter fixes their number, titles and the division of powers, and the ERC and the National Business Registration Portal record them, so a counterparty can verify who may sign. Under Article 12(3) of the Law on Enterprises every enterprise must have at least one legal representative residing in Vietnam at all times. There is no nationality requirement. If the only resident legal representative leaves Vietnam, he or she must authorise in writing another individual residing in Vietnam to exercise those rights and obligations, and remains responsible for their exercise; the Ministry of Finance has indicated that the person so authorised may sign business registration filings. If the sole legal representative is absent for more than 30 days without such an authorisation, or dies, disappears, is detained, loses capacity or is banned from management, the owner, the members' council or the board must appoint a replacement.

A foreign legal representative who will work in Vietnam needs a work permit or an exemption certificate and a visa or temporary residence card, so immigration is planned alongside incorporation (Chapter 4); a capital-contributing owner of at least VND 3 billion is exempt from the work permit but not from immigration formalities. The legal representative owes the company the statutory duties of honesty, prudence and loyalty, must act in its best interests, must disclose related interests and is personally liable for loss caused by breach; Law No. 76/2025/QH15 confirmed that this liability is determined under the law, which makes it worth defining the duties, and the division of powers between several legal representatives, in the charter and in an internal delegation of authority. Appointing a junior employee as legal representative to avoid immigration steps places the company's signature in the hands of someone with no authority within the group and is a frequent source of disputes and, occasionally, of unauthorised dealings with company assets.

Single-member LLC

Where the owner is an organisation it chooses one of two models: a chairman of the company plus a director or general director, or a members' council of three to seven authorised representatives of the owner plus a director. A supervisory board is required only where the owner is a State enterprise. Where the owner is an individual, the owner is chairman and may also be director. The owner decides the charter, the capital, restructuring, major asset transactions, distributions and the appointment of the chairman or council and the director, by written resolution. The owner must keep its own assets separate from the company's and may withdraw capital only by transfer of the company or in the other cases the law allows; withdrawing profit while the company cannot pay its debts makes the owner liable. Because one owner decides everything, the practical governance questions are internal: who within the parent group may instruct the chairman, and whether the director's authority is limited by the charter and the internal delegation.

Multi-member LLC

The members' council, made up of all members or their authorised representatives, is the highest organ; it elects a chairman and appoints the director or general director. Votes are weighted by capital contribution. Resolutions pass with the votes of members holding at least 65% of the capital of those attending, and at least 75% for the sale of assets worth half or more of the total assets recorded in the latest financial statements, amendments to the charter, reorganisation and dissolution, unless the charter provides otherwise; written resolutions need members holding at least 65% of the total charter capital. A member who wants to sell to an outsider must first offer the stake to the other members pro rata on the same terms, and may sell to the outsider only what the members do not take within 30 days. Law No. 76/2025/QH15 added a procedure for convening the members' council where the chairman cannot act, for example through prolonged absence, detention or incapacity, with the company bearing the reasonable costs of the meeting. A supervisory board is compulsory only for State enterprises and their subsidiaries. The arithmetic matters: a 35% member has a blocking vote on ordinary matters at the statutory threshold and a 25% member on the reserved matters, which is why joint-venture charters lower the ordinary threshold to a simple majority where a majority partner wants control, raise it where a minority wants protection, and in every case list the reserved matters expressly.

Joint stock company

A JSC has a general meeting of shareholders, a board of directors of three to eleven members elected for terms of up to five years, and a director or general director. It must choose between two models: a supervisory board, which is not required where the company has fewer than eleven shareholders and no institutional shareholder holds 50% or more of the shares; or at least 20% independent directors and an audit committee under the board. General meeting resolutions pass with more than 50% of the votes of attending shareholders, and 65% for changes to share classes and numbers, changes of business lines or organisational structure, investments or sales of assets worth 35% or more of total assets, and reorganisation or dissolution, in each case unless the charter provides otherwise; board members and supervisors are elected by cumulative voting unless the charter provides otherwise. Shareholders holding 5% or more of the ordinary shares, or a lower percentage set in the charter, may call a general meeting in defined cases, nominate board candidates, inspect the register and the minutes, and, under Law No. 76/2025/QH15, convene the general meeting themselves within 30 days where the board of a company without a supervisory board fails to convene one when required; the shareholder list for a meeting is drawn from both the shareholder register and the securities ownership register. Founding shareholders must together hold at least 20% of the ordinary shares at registration and may not transfer them to non-founders within three years without the general meeting's approval. Preference shares are available only in a JSC: voting preference shares (held by founding shareholders for three years and by State-authorised organisations), dividend preference shares and redeemable preference shares, the last two carrying no vote. A JSC that falls below three shareholders for six consecutive months without converting must dissolve. The thresholds and organs described here were not changed by the 2025 amendments.

Duties, related-party transactions and liability

Managers (members' council members, the chairman, directors, the legal representative and supervisors) owe statutory duties to exercise their rights and perform their obligations honestly, prudently and in the company's best interests, to be loyal to the company and its owners, not to misuse company assets, information or opportunities, and to disclose their and their related persons' interests in other enterprises. Contracts and transactions between the company and its managers, its members or shareholders above set percentages, their related persons and their affiliated companies must be approved by the members' council, the board or the general meeting as the law requires, with the interested party not voting; a contract made without the required approval is void and the persons responsible are liable for the loss. Managers who breach their duties are liable to the company, and a member of an LLC, or shareholders holding 1% of a JSC, may sue them on the company's behalf. For foreign groups, intra-group service, licence and loan agreements with the parent are related-party transactions that need the internal approval and also transfer pricing documentation (Chapter 3); the practical safeguards are a clear charter, a written internal delegation of authority to the legal representative and the director, board approval of intra-group agreements, and minutes.

Charter v shareholders' agreement

Vietnamese law treats the charter as the company's constitution and the registration office applies it; a shareholders' agreement binds the parties who sign it but does not bind the company or the authority unless its terms are in the charter. Reserved matters, altered voting thresholds, board composition and appointment rights, quorum rules, deadlock and escalation mechanisms, dividend policy, transfer restrictions, pre-emption and tag and drag rights should therefore be written into the charter as well as the agreement, and the two should be drafted together so they do not conflict (where they do, the charter prevails at the registration office and a Vietnamese court will start from it). Put and call options, drag and tag rights and non-compete undertakings are enforceable between the parties under the Civil Code, but their exercise still requires the Article 21 registration, the ERC amendment and the capital account steps described in Chapter 8, and a transfer that the charter's pre-emption clause would block cannot be forced through on the strength of the agreement alone.