The appointment of a Legal Representative is not merely an administrative procedure when establishing a company; it directly affects the company’s ability to operate effectively afterward.
Under the Law on Enterprises, every company in Vietnam is required to have at least one Legal Representative, and at least one of them must reside in Vietnam. Failure to meet this requirement will cause difficulties right from the registration of electronic invoices and the enterprise electronic identification account through to transactions with state authorities and banks.
This article clearly explains the important legal requirements and the 5 key factors that foreign investors need to carefully consider before appointing a Legal Representative.
1. Why Does a Company in Vietnam Need a Legal Representative? (Legal Requirements)
Pursuant to Article 12 of the Law on Enterprises 2020 (as amended and supplemented), every enterprise operating in Vietnam must have at least one Legal Representative. In cases where the company appoints multiple Legal Representatives, it must ensure that at least one of them resides in Vietnam at all times.
The Legal Representative is the individual who represents the enterprise in exercising the rights and performing the obligations arising from the enterprise’s transactions, represents the enterprise as the requester for settlement of civil matters, plaintiff, defendant, or person with related rights and obligations before Arbitration, Courts, and other obligations as prescribed by law.
In the era of digitalized administrative management, the role of the Legal Representative is closely linked to the Government’s mandatory electronic systems:
- Registration of the Enterprise Electronic Identification Account (e-ID): Under Decree 69/2024/ND-CP, the creation of an organization’s electronic identification account must be carried out through the VNeID Level 2 account that has completed biometric verification of the individual who is the Legal Representative.
- Activation and Use of Electronic Invoices: The tax authority’s invoice management system requires biometric authentication and digital signatures linked to the identity of the Legal Representative.
- Administrative & Banking Transactions: Performance of tax declaration obligations, opening of investment capital accounts, registration of company seals, and conducting litigation-related transactions.
2. Five Key Factors Before Appointing a Legal Representative
Before issuing a decision to appoint personnel to the position of Legal Representative, foreign investors need to conduct an in-depth analysis of the following 5 groups of factors:
2.1. Residency Requirement in Vietnam
According to the Law on Enterprises, a company may appoint multiple Legal Representatives. However, among them, at least one person must be a resident in Vietnam.
This resident individual must have a clear permanent or temporary residence address confirmed by the police authorities. For foreign nationals, the residency condition is typically linked to holding a Work Permit and a Temporary Residence Card (TRC) or Permanent Residence Card.
The appointment of at least one Legal Representative residing in Vietnam is a mandatory condition for the enterprise to carry out important procedures such as registering the corporate electronic identification account (e-ID), activating electronic invoices, and conducting transactions with state authorities.
2.2. VNeID Level 2 and Biometric Verification
- The individual holding the position of Legal Representative is required to complete registration of a VNeID Level 2 account through the public security authorities and biometric data collection.
- This VNeID account is the sole key to identifying the enterprise on the National Public Service Portal, registering the Temporary Resdence Card (TRC), and activating the electronic invoice system.
- This procedure is strictly personal in nature and cannot be authorized for a third party to perform on behalf of the individual. For newly established enterprises, having a corporate VNeID account is extremely important to activate electronic invoices and commence operations immediately. If the investor has not yet found a suitable Legal Representative, they may seek support from a professional service provider.
Vina TPT supports FDI enterprises in selecting a Legal Representative and completing all related procedures for VNeID, corporate e-ID, and electronic invoices in a fast and fully compliant manner.
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2.3. Availability and Willingness to Stay in Vietnam
- The appointed person must commit to working time and regular presence in Vietnam to approve documents, financial transactions, and work directly with competent authorities when inspection or examination is required.
2.4. Legal Responsibility and Personal Risk
- The Legal Representative bears personal responsibility before the law and before the enterprise owners for the performance of the assigned rights and obligations.
- This individual may face administrative violation penalties (fines can reach up to VND 150 million for violations related to foreign labor management), joint liability for the enterprise’s tax debts, and the application of temporary exit suspension measures under the Law on Tax Administration.
2.5. Flexibility to Change Later
- The Law on Enterprises allows the company to carry out procedures to change the Legal Representative at any time.
- The enterprise only needs to send a notification to the Business Registration Office under the Department of Planning and Investment where the company is headquartered within 10 days from the date of the change.
3. Practical Recommendation for Foreign Investors
For international investors newly entering the Vietnamese market, immediately meeting the residency requirement as well as registering a VNeID Level 2 account for foreign personnel often faces significant time barriers.
Recommended approach: Investors should use reputable local personnel or professional Legal Representative appointment services during the initial establishment stage. This strategy enables the enterprise to quickly complete procedures for obtaining the Investment Registration Certificate (IRC), Enterprise Registration Certificate (ERC), activating the enterprise VNeID account, and issuing electronic invoices to commence business operations without interruption. Once the foreign investor completes the Work Permit, Temporary Residence Card (TRC), and VNeID procedures, the company can then proceed with the change of Legal Representative according to the standard legal process.
4. How Vina TPT Supports You with Legal Representative Services
With in-depth consulting experience for thousands of FDI enterprises in the Vietnamese market, Vina TPT delivers comprehensive and professional solutions related to management personnel as well as legal compliance for enterprises. We proactively review and thoroughly evaluate the legal conditions and compliance capabilities of the personnel intended to hold the Legal Representative position, ensuring full adherence to current regulations.
In addition, Vina TPT provides professional Legal Representative services with flexible options on a temporary or long-term basis, helping enterprises establish a proper and lawful operational structure from the very first days of launch. In the context of digital transformation, our expert team will directly accompany personnel in completing the full package of digital identification procedures – from registering a VNeID Level 2 account, activating the enterprise e-ID, to initiating the electronic invoice system.
When the enterprise needs to restructure, Vina TPT will handle the entire process of changing the Legal Representative, including the preparation of accurate dossiers and representation of the enterprise in direct work with the Department of Planning and Investment to update the Enterprise Registration Certificate promptly. In particular, with a multilingual consulting team proficient in English, Vietnamese, Japanese, and Chinese, we are committed to delivering a transparent, accurate consulting experience and eliminating all language barriers for international investors.
Conclusion
Selecting a Legal Representative is a strategic step that requires a close combination of legal compliance and practical operational efficiency. A clear understanding of VNeID conditions, accurate fulfillment of residency requirements, and preparation of risk contingency plans will help foreign investors build a solid legal foundation in Vietnam.
Are you preparing to establish a company or need to restructure the Legal Representative position in Vietnam? Contact Vina TPT today for an in-depth legal consultation and comprehensive support solutions.