Client is representative office of foreign traders in Viet Nam. The Client would like to seek our legal opinion regarding kind of document confirming authority of the signatory of the contract in accordance with Vietnam Law. SB Law therefore provide legal opinion to the Client as below:
- What kind of documents (For example: Power of Attorney or Company Charter) may confirm the authority of the signatory of the contract under the National Law.
1.1. According to Clause 2 Article 134 Civil Code, a representative of the legal entity is the person authorized to sign the contract. Meanwhile, Article 85 of Civil Code stipulates that the representative of a legal entity may be a legal representative or an authorized representative.
1.2. Regarding legal representative of the legal entity:
a) As per Article 137 of Civil Code, legal representatives of legal entity will be inclusive of the following person:
- (i) The person appointed by the legal entity according to its charter;
- (ii) The person competent to represent as prescribed by law;
- (iii) The person appointed by a court during the proceedings at the court.
b) With regard to legal entities are enterprises/companies, according to Clause 1 Article 12 of Law on enterprises, the enterprise’s legal representative is the person that, 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 in court, arbitration, and performs other rights and obligations prescribed by law.
- The information of legal representative will be recorded in the Enterprise Registration Certificate (“ERC”) or Business Registration Certificate (“BRC”) of the enterprise and his/her rights and obligation specified in the corporate’s charter. Subject to each type of enterprises, the legal representative may hold title of General Director or Director or Chairman of the Board of Directors or President of the company.
- In case the enterprise only has one legal representative, legal representative stated in the ERC or BRC shall be the person that, on behalf of enterprise, having rights to sign contracts. Thus, ERC or BRC of enterprise is considered a document confirming legal representative’s authority to sign the contract in accordance with Law on enterprises.
- It is also noted that, according to Clause 1 Article 55, Clause 1 Article 76 and Clause 2 Article 167 of Law on enterprises, there are several kinds of contracts within the jurisdiction of company’s owner as organization (with regard to single member limited liability company); Council Members (with regard to multiple-member limited liability company); and General Meeting of Shareholders and Board of Directors (with regard to Joint Stock Company). Accordingly, subject to each type of enterprise, the legal representative must be approved by company’s owner or Council Members or Board of Directors or General Meeting of Shareholders before signing contracts including: “Contracts for borrowing, lending, sale of assets and other contracts prescribed by the company’s charter whose value are at least 50% of the total assets written in the latest financial statement (or a smaller ratio or value specified in the company’s charter)”. In this case, beside ERC or BRC, the Corporate Charter, Decision of company’s owner as organization; Meeting Minutes and Resolution of Council Members or Board of Directors or General Meeting of Shareholders are also considered documents confirming legal representative’s authority to sign contract.
- In case there are more than one legal representative in the enterprise, its Charter shall specify the rights and obligations of each of person. In this situation, the kind of documents may confirm legal representative’s authority to sign the contracts including: (i) ERC or BRC; and (ii) corporate charter.
1.3. Regarding authorized representative of legal entity:
a) According to Article 135 and Clause 1 Article 138 of Civil Code, an authorized representative is person having representation rights based on authorization establishment between the representative and the represented person. The authorized representative shall, on behalf of the mandator, establish and perform transactions within the scope of his/her authority established by the power of attorney.
b) In addition, according to Clause 3 Article 12 Law on enterprises s, an enterprise shall have at least one legal representative residing in Vietnam. Whenever this representative leaves Vietnam, he/she has to authorize another Vietnamese resident, in writing, to act as the legal representative, in which case the authorizing person is still responsible for the authorized person’s performance.
c) The representative and authorized representative may establish authorization relationship based on the two forms including: (i) to sign Power of Attorney; or (ii) to sign Authorization Contracts.
d) Thus, Power of Attorney and Authorization Contract may confirm the authorized representative’s authority to sign the contract in accordance with Civil Code and Law on enterprises s.
2.What is the statutory form for the above said documents? For example, the document must be prepared in writing and it must be notarized?
2.1. For the ERC and BRC of the enterprises.
- ERC and BRC of enterprises issued by business registration authority. According to Clause 2 Article 3 of Decree 23/2015/ND-CP, the notarized documents have legal value when being used as substitutes for original copies in transactions. Therefore, these documents must be notarized by notarization competent agencies.
2.2. Charter of the company
- The Charter is issued by the enterprises in writing. In the transaction between enterprise and enterprise together, it is not compulsory to provide the Charter notarized by the notarization competent agencies. The enterprise may prepare the original copy or the copy version chopped its seal on the pages.
2.3. Decision of company’s owner as organization; Meeting Minutes and Resolution of Council Members or Board of Directors or General Meeting of Shareholders
- These documents must be prepared in writing. In the transaction between enterprise and enterprise together, it is not compulsory to provide these documents notarized by the notarization competent agencies. The enterprise may prepare the original copy or the copy version chopped its seal on the pages.
2.4. Power of Attorney and Authorization Contract
- These documents must be prepared in writing. In the transaction between enterprise and enterprise together, it is not compulsory to provide these documents notarized by the notarization competent agencies. The enterprise may prepare the original copy or the copy version chopped its seal on the pages. However, in case of court of proceedings, the Power of attorney and/or Authorization Contract must be notarized.
3.What is the statutory content to be included in the document for confirming the authority of the signatory?
3.1. Charter of the company
- According to Clause 2 Article 24 Law on enterprises, the statutory contents of the company’s charter for confirming the authority of the signatory will be quantity, titles, rights and obligations of each of the enterprise’s legal representatives.
3.2. Decision of company’s owner as organization; Meeting Minutes and Resolution of Council Members or Board of Directors or General Meeting of Shareholders.
- According to Article 60 and Article 150 of Law on enterprises, the statutory content to be included in the Meeting Minutes for confirming the authority of the signatory including: “Approved decisions/contracts and corresponding ratio of affirmative votes”.
- The Decision/Resolution must have content regarding approval of contracts with its name and the main contents; and appoint the legal representative to sign the approved contracts.
3.3. Power of Attorney and Authorization Contract
- According to Article 14 Law on enterprises and Section 13 of Civil Code, the statutory contents of Power of Attorney and Authorization Contract will be inclusive of:
- Information of Mandator: full name, enterprise code, head office address, name of legal representative and her/his title.
- Information of authorized representative: full name, date of birth, nationality, number of ID card/passport, date of issue, place of issue and permanent address.
- Scope of authorization works.
- Validity term of authorization.
- Signatures of the legal representatives and authorized person.
4.In addition to above mentioned documents, are there any other kind of documents may confirm the authority of the signatory?
4.1. According to Article 75 and Article 76 of Civil Code, legal entities is classified into commercial legal entity and non-commercial legal entity, of which, the type of enterprise/companies will be commercial legal entity. The non – commercial legal entity includes regulatory agencies, people’s armed units, political organizations, socio-political organizations, political-socio-professional organizations, social organizations, socio-professional organizations, social funds, charitable funds, social enterprises and other non-commercial organizations.
4.2. For the organizations subject to the above non-commercial legal entity, the information of representative may be recorded in the Incorporation Decision or other documents with equivalent value issued by competent authorities. In addition, they shall also issue Appointment Decision to specify a title, rights and obligation of the representative. Therefore, in case the contracts signed by representative of non-commercial legal entities, its Incorporation Decision and Appointment Decision of representative will be the documents confirming their signature authority.
The Incorporation Decision and Appointment Decision must be prepared in writing and notarized by notarization competent agencies or copy version chopped the seal of non-commercial legal entity.
4.3. In case the contracts signed by other manager of the non-commercial legal entity, their rights and obligation shall be stated in the Work Assignment Decision and/or Appointment Decision. Thus, the Work Assignment Decision and Appointment Decision for the signer title shall be the documents confirming their signature authority.
The Work Assignment Decision and Appointment Decision must be prepared in writing and notarized by notarization competent agencies or copy version chopped the seal of non-commercial legal entity.
4.4. The Civil Aviation Authority of Vietnam is an agency directly under the Ministry of Transport in accordance with Decision No.121/2002/ QĐ-TTg of Prime Minister dated 19th September 2002. The Civil Aviation Authority of Vietnam is entitled to issue flight permits for civil aviation activities in accordance with the law. A Director of Civil Aviation Authority of Vietnam will be the person authorized to approve/sign the flight permits for civil aviation activities. The authority of a Director shall be stated in the Appointment Decision issued by Ministry of Transports.
4.5. Covid-19 pandemic has impacted directly the flight licensing process for civil aviation activities of the Civil Aviation Authority. On 30th January 2020, the Prime Minister issued Decision No.170/QD-TTg regarding setting up National Steering Committee for prevention of disease caused by respiratory infections of the new strain of corona virus causes (“National Steering Committee”) in which, representatives of the government and all relevant ministries are members. Accordingly, in order to ensure the prevention of the Covid 19, before making any decision such as granting permit for international flights which may causes impact on Covid 19 pandemic prevention in Vietnam, the Civil Aviation Authority of Vietnam must consult with National Steering Committee. Based on the consultation of National Steering Committee, the Civil Aviation Authority of Vietnam shall consider to grant flight permits (including international flight permits) to the airlines.
4.6. Regarding purchasing and use of Covid -19 vaccines activities:
a) On 26 February 2021, the Government issued Resolution No.21/NQ-CP on purchase and use of Covid -19 vaccines. According to this Resolution, the Government assigned the Ministry of Health to take charge and cooperate with Ministries, agencies, and local governments in purchasing, importing, receiving donated vaccines, managing and using COVID-19 vaccines in 2021 for people aged at least 18. The Ministry of Health will be a central point to purchase, import, receive donated vaccines; be held accountable for quality, prices; manage, distribute, ensure publicness and transparency, prevent waste and misconduct.
b) So that, contracts related to purchasing, importing and receiving donated vaccines shall be signed by Minister of Health. The Minister of Health’s authority shall be stated in his Appointment Decision approved by National Assembly of Vietnam. The Appointment Decision must be prepared in writing and notarized by notarization competent authorities.
c) Depend on each kind of contracts, the Minister of Health is entitled to assign other competent person, on behalf of Ministry of Health, signs the contracts. In this case, the Work Assignment Decision of Minister of Health is also considered the document confirming the authority to sign the Contract. The Work Assignment Decision must be prepared in writing and notarized by notarization competent authorities.
4.7. Regarding contract transactions related to state-owned enterprises (For example: transfer contribution capital of state-owned enterprises as members/shareholders in the enterprise; M&A):
a) In this transaction, the authorized representative of the state-owned enterprise appointed by Appointment Decision of its representative who shall has right, on behalf of state -owner enterprise, to sign the transfer contracts. In this case, the authorized representative only entitled to sign the contract after receiving Approval Letter from upper level.
b) Appointment Decision and Approval Letter must be prepared in writing and notarized by notarization competent authorities or copy version chopped seals of state-owned enterprise on the pages.
4.8. Regarding contract transaction between the individuals and enterprise or non-commercial legal entity. The individuals are entitled to directly to sign the contracts in direct. In case the individual would like to authorize the third party to sign contracts, they and authorized party must be signed Power of Attorney or Authorization Contracts in writing. These documents should be an original copy or notarized by notarization competent authorities.
4.9. Regarding contract transactions related to security and defense issues:
The head of the national security agency (according to the Appointment Decision) will be the person that, on behalf of the national security agency, to sign contracts with partners. In case there are kind of contract must consult with its Board of Directors or other relevant agencies before signing, the head of the national security agency only entitled to sign or refuse the contract after receiving consultation from them.
