Legal Representative of a Vietnamese Company 2026 for US and Foreign Owners: Personal Liability, the Tax-Debt Exit Ban, Power of Attorney and the Second Representative

Key takeaways

• Article 12 of the Law on Enterprises requires at least one legal representative who resides in Vietnam. A sole representative who leaves must authorise a resident individual in writing and stays responsible for what that person does. Absence of more than 30 days without an authorisation, or death, disappearance, criminal prosecution or detention, obliges the owner, the members' council or the board to appoint someone else.
• Article 13 makes the representative personally liable to the company. The duties are honesty, prudence, loyalty and disclosure of related interests. A breach that causes loss is paid for personally.
• The title carries administrative and criminal exposure. Tax evasion, invoice offences, evasion of social insurance, pollution and fire safety are the usual files. The company itself can be prosecuted for the first four, and the Penal Code says that does not release the individual.
• Company tax debt can stop the legal representative, and the beneficial owner, at the border. Under Decree 252/2026, in force since 1 July 2026, the trigger is a company under tax enforcement with debt of VND 500 million or more that is 120 days or more overdue, after a 30-day electronic notice. A foreigner's own overdue tax has no threshold and no notice period.
• Residence and work authorisation have to match the role. A capital contribution of VND 3 billion or more exempts the investor from the work permit and supports an investor residence card. A manager who is not a shareholder needs a work permit and an employee card.
• The stable design is two legal representatives. The foreign owner keeps one seat, a resident manager holds the other, the charter divides their powers, and a limited power of attorney stands ready.

The following is an illustration, not a client matter. The owner of a US tooling company is the only legal representative of its subsidiary outside Ho Chi Minh City. He visits four times a year for a week. A tax audit produces an assessment and penalties of about VND 600 million, the company disputes part of it and pays nothing while the dispute runs, and the debt passes 120 days overdue. The tax office posts a notice to the company's electronic tax account. Nobody forwards it to head office. On his next trip he enters Vietnam without difficulty and is stopped at departure: the company he represents has overdue tax debt, and his exit is suspended. He stays until head office wires the money and the tax office's cancellation reaches immigration.

Nobody in that story set out to break the law. Three things were simply never explained when he accepted the title: the position carries a duty to reside in Vietnam, the company's tax, insurance, fire-safety and environmental obligations attach to him personally, and the company acts in his name every day he is away. This article sets out what a foreign legal representative needs to know in 2026. The Vietnamese law in it was reviewed by Ta Thi Nhu Quynh of our Ho Chi Minh City office, whose guide Living in Vietnam 2026 for Americans and Other Foreigners: Temporary Residence Cards, the VNeID Account and the Resident Legal Representative Rule covers the basic residence rule in its section 8. This article takes the subject further, into liability and risk.

1. What a legal representative is: not the chairman, the person who answers

Article 12 of the Law on Enterprises (No. 59/2020/QH14, amended by Law No. 76/2025/QH15) defines the legal representative as the individual who represents the company in exercising the rights and obligations that arise from its transactions, and who represents it in court and arbitration. A limited liability company or a joint stock company may have one or several. The charter states how many there are, their titles and their powers. Where the charter does not divide the powers, each representative has full authority toward third parties and all of them are jointly liable for loss caused to the company.

US law has no single equivalent. The role combines an officer with authority to bind the company, the person regulators hold responsible, and the name on every registration document.

Foreign owners usually choose one of three configurations.

2. The residence duty: what Article 12 says

At least one representative must reside in Vietnam. The statute says "cư trú tại Việt Nam". In practice banks and authorities look for lawful long-term residence status, not a count of days. An owner who comes and goes on business visas or e-visas is not resident for this purpose.

A sole representative who leaves must authorise a resident in writing. The authorised person must be an individual residing in Vietnam, and the representative remains responsible for how the authorised rights and duties are performed. The authorisation is not filed with the registration authority, but banks, tax offices, customs and courts ask for it. It should be in Vietnamese or bilingual, signed, sealed, and notarised where the recipient requires it.

If the authorisation expires before the representative returns, the authorised person continues to act until the representative comes back or until the owner, the members' council or the board of directors appoints a new representative.

More than 30 days abroad without an authorisation forces a replacement. The same duty to appoint another representative applies where the sole representative has died, is missing, is being prosecuted, is detained or serving a sentence, has lost or has limited legal capacity, or has been barred by a court from holding the position. In a two-member limited liability company, if the member who is the representative is in one of those situations, the other member automatically becomes the legal representative until the members' council decides otherwise. This matters most in the situation described in Arrested in Vietnam as a Foreigner 2026: How to Reach a Lawyer in Hours, Not Weeks : once the representative is detained, the company needs someone who can act the same day.

The fine is the smaller problem. Leaving without a written authorisation is an administrative violation under the enterprise registration penalty rules of Decree 122/2021. The real cost is operational. Banks decline to disburse, customs rejects declarations, and the tax office may record the company as not operating at its registered address, a status that, if not cured, leads to the exit suspension in section 6 and can end in revocation of the enterprise registration certificate.

3. Drafting the power of attorney: five points

The authorisations we are asked to review usually fail in the same way: full authority, no end date. Vietnamese banks and tax offices treat that kind of document with suspicion, and it makes the owner answerable for everything the holder does. We suggest the following.

1. List the scope. Include day-to-day signing, employment contracts, purchase contracts up to a stated amount, tax and social insurance filings and customs documents. Exclude disposal of real estate, borrowing and guarantees, changes to equity, charter amendments and settlement of litigation.
2. Set a ceiling, per transaction and per month.
3. Set a term. Match it to the period of absence, or let it lapse after three to six months unless renewed.
4. Prohibit sub-delegation.
5. Require reporting. The holder sends the representative a weekly list of what was signed.

The authorisation has to fit the charter and the resolutions of the members' council or the board. Where the charter reserves a class of transaction for the members or the board, an authorisation cannot go around it.

4. Article 13: the representative's personal duties

Article 13(1) sets out three duties.

• To perform the role honestly and prudently, to the best of one's ability, in the lawful interests of the company.
• To be loyal to the company, and not to use its information, business opportunities or assets, or one's position, for personal benefit or for the benefit of another organisation or individual.
• To notify the company promptly, fully and accurately of the enterprises in which the representative or a related person is an owner or holds shares or a capital contribution.

Under Article 13(2), a representative who breaches these duties is personally liable for the loss caused to the company.

Foreign owners most often trip over the second and third. The same person is commonly an officer of the US parent and the legal representative of the Vietnamese subsidiary. Sales, service fees and loans between the two are related interests that have to be declared in Vietnam, and they are also transfer pricing transactions there.

Two further signatures belong to the representative. The beneficial owner declaration introduced by Law 76/2025 is filed by the company, and changes must be notified within 10 days; the regime, including the changes made by Decree 296/2026, is explained in Nominee Investment in Vietnam 2026: Why Holding Land or Shares Through a Vietnamese Name Fails, What Precedent 02/2016/AL Really Decided, and the 25% Beneficial Owner Rules . Enterprise registration filings under Decree 168/2025 are signed by the representative, who answers for their truthfulness. Nominee shareholdings, capital that was registered but never paid in, and a registered address that is not the real one all land on the person who signed.

5. Administrative and criminal exposure

Vietnam's Penal Code recognises corporate criminal liability, but only for the offences listed in Article 76. That list includes tax evasion, the invoice offence, evasion of social insurance and environmental pollution. It does not include the fire-safety offence, which only individuals can commit. Article 75(2) adds that the criminal liability of the company does not exclude the criminal liability of an individual. In practice investigators begin with the legal representative.

In these files, "I was not in Vietnam and did not know" is rarely a defence. The residence duty in Article 12 and the duty of prudence in Article 13 are read to mean that the representative should have known. The employment rules behind the last row are covered in Hiring in Vietnam 2026 for US and Foreign Employers: Why You Cannot Fire At Will, the 2% Union Levy, 32% Social Insurance and Wildcat Strikes .

6. The tax-debt exit ban under Decree 252/2026

Numeric thresholds for suspending exit over tax debt first appeared in Decree 49/2025 of 28 February 2025. The new Law on Tax Administration (No. 108/2025) took effect on 1 July 2026 together with Decree 252/2026/ND-CP, which keeps the thresholds and changes three things: beneficial owners are now covered, a company that is not operating at its registered address is caught only after 120 days, and the tax authority must give 30 days' electronic notice first. The Tax Department's Official Letter 5622/CT-NVT of 5 August 2026 tells tax offices how to apply it.

Three practical points follow.

First, the threshold measures the company's debt and the ban falls on individuals. Both legal representatives are covered. So is a foreign owner who has been declared as beneficial owner, whether through a holding of 25 per cent or more or through control, even without holding the title of legal representative.

Second, the warning goes to the company's electronic tax account. An owner abroad will not see it and will learn of the problem at the airport. Have the accountant check the account every month and report to head office. The 30 days are the period in which the problem can still be fixed, and bringing the debt below VND 500 million is enough.

Third, the foreigner category is separate and stricter. A foreign legal representative who is a Vietnamese tax resident and has unpaid personal income tax of any amount can be suspended without warning. Settle personal tax before each departure, not only the company's.

7. Residence and work authorisation for a foreign legal representative

Residing in Vietnam needs a lawful status to stand on. Which one depends on capital and role.

What counts is capital actually contributed, with evidence, not the figure in the charter. The title of legal representative confers no residence status by itself. There is also a procedural reason to have a resident representative: since 1 June 2026 a sponsoring company files visa and residence card applications through its corporate VNeID account, and that account can only be opened by a representative who already holds a personal account and a residence card. The card tiers, the VNeID account and the documents are set out in sections 2, 3 and 7 of Living in Vietnam 2026 for Americans and Other Foreigners .

8. A governance design that holds

1. Two legal representatives, with powers divided in the charter. The foreign owner keeps the major matters: real estate, borrowing, equity, the charter and litigation. A resident manager, Vietnamese or a long-term expatriate, runs daily operations.
2. A current power of attorney in reserve. Even with two representatives, someone must be able to exercise the owner's reserved powers during a long absence. Draft it as in section 3 and renew it every six months.
3. A named person who checks the electronic tax account, the social insurance account and the corporate VNeID account every month and reports to head office.
4. A change of representative made everywhere at once: the enterprise registration certificate, the investment registration certificate if it names the representative, bank mandates and online banking rights, the digital signature, and the tax, social insurance and VNeID accounts.
5. A personal exposure review before anyone accepts the title: the company's current tax, social insurance, fire-safety and environmental position, and any open administrative penalty. The person taking over should know what is being taken over.

How Louis Group can help

Half of a foreign legal representative's problem lies in the Vietnamese charter, authorisation and filings, and half in how the parent company supervises a subsidiary it visits four times a year. Our Ho Chi Minh City and Hanoi offices draft dual-representative charters and powers of attorney, handle changes of representative, work permits and residence cards, and act on the lifting of exit suspensions. We also run the personal exposure review described above before an executive accepts the role.

Vietnamese law reviewed by Ta Thi Nhu Quynh, Louis & Partners Vietnam, Ho Chi Minh City. This article reflects Vietnamese enterprise, tax administration and labour rules as of November 2026. It is general information, not legal advice; charter design, the scope of an authorisation and personal liability depend on the facts of each case.

Sources

• Government of Vietnam, policy portal, 4 July 2026: Những điểm mới về tạm hoãn xuất cảnh theo Nghị định 252/2026/NĐ-CP
• Government of Vietnam, policy portal, 8 August 2026, on Tax Department Official Letter 5622/CT-NVT: Hướng dẫn triển khai biện pháp tạm hoãn xuất cảnh theo Nghị định 252/2026/NĐ-CP
• Official Gazette, Nos. 1073 and 1074, 20 August 2025: Decree No. 219/2025/ND-CP on foreign workers in Vietnam (PDF, Vietnamese)
• Government of Vietnam, policy portal, 23 July 2025: Toàn văn Luật số 86/2025/QH15 sửa đổi, bổ sung một số điều của Bộ luật Hình sự
• Government e-newspaper (Báo Chính phủ), 8 August 2025: Trốn đóng BHXH, BHYT mức độ nào sẽ bị xử lý hình sự?

Related reading

• Living in Vietnam 2026 for Americans and Other Foreigners: Temporary Residence Cards, the VNeID Account and the Resident Legal Representative Rule
• Nominee Investment in Vietnam 2026: Why Holding Land or Shares Through a Vietnamese Name Fails, What Precedent 02/2016/AL Really Decided, and the 25% Beneficial Owner Rules
• Arrested in Vietnam as a Foreigner 2026: How to Reach a Lawyer in Hours, Not Weeks

Frequently asked questions (FAQ)

Can a foreign owner who lives abroad be the legal representative of a Vietnamese company?

Yes, but not as the only one without further steps. Article 12 of the Law on Enterprises requires at least one legal representative residing in Vietnam. A sole representative who leaves must authorise a resident individual in writing, and absence of more than 30 days without an authorisation obliges the company to appoint another representative. Adding a second, resident representative is the durable answer.

Does the power of attorney have to be registered?

No. It is not filed with the enterprise registration authority. Banks, tax offices, customs and courts will ask to see it, so prepare it in Vietnamese or bilingual form, signed and sealed, with a stated scope, monetary ceiling and term, and have it notarised where the recipient requires.

Can I be stopped from leaving Vietnam because the company owes tax?

Yes. Under Decree 252/2026, in force since 1 July 2026, where the company is under tax enforcement with debt of VND 500 million or more that is 120 days or more overdue, the tax authority gives 30 days' electronic notice and then asks immigration to suspend the exit of the legal representatives and beneficial owners. Paying, or bringing the debt below VND 500 million, lifts it. A foreigner's own overdue tax is treated separately, with no threshold and no warning.

Is the legal representative criminally liable for the company's violations?

Potentially. The company can be prosecuted only for the offences listed in Article 76 of the Penal Code, which include tax evasion, the invoice offence, social insurance evasion and pollution, and Article 75 states that this does not exclude an individual's liability. The legal representative is usually the first individual investigators look at.

Does a foreign legal representative need a work permit?

Not if they are the owner or a capital-contributing member of a limited liability company, or the chairperson or a board member of a joint stock company, with a contributed capital value of VND 3 billion or more. Decree 219/2025 exempts them, and the company only notifies the provincial authority at least three working days before the start date. Below that amount, or for a manager who is not a shareholder, a work permit is required.

What happens if the legal representative is detained or resigns suddenly?

The owner, the members' council or the board must appoint a new representative and amend the enterprise registration. Until that is done the company can keep operating only if it has a second legal representative or a valid authorisation. Without either, bank and customs paperwork stops.

We have two legal representatives and the charter does not divide their powers. What follows?

Each of them has full authority toward third parties and can sign alone, and both are jointly liable for loss caused to the company. The charter should state each one's title and scope of authority.