The mechanism of authorized representatives of entity members in multi-member limited liability companies

In corporate investment and governance, it is common for an entity member to appoint an authorized representative (“Authorized Representative”) to exercise the rights attached to its capital contribution, particularly in foreign-invested enterprises. In practice, however, many entity members still confuse the number of Authorized Representatives with their voting rights, resulting in difficulties in the organization and operation of the Members’ Council. This article analyzes the legal framework governing Authorized Representatives under the Law on Enterprises 2020 and highlights several legal issues that entity members should take into consideration when applying this mechanism. 

1. Authorized Representatives of entity members

Under Vietnamese law, an Authorized Representative is an individual authorized in writing by an entity member to, on behalf of and in the name of such entity member, exercise the rights and perform the obligations of the member in the company.10 The written appointment of an Authorized Representative becomes effective against the company only from the time the company receives the notice and must contain all mandatory information prescribed by law.11 

Unless otherwise provided in the company charter, an entity member holding 35% or more of the charter capital may appoint up to 03 (three) Authorized Representatives.12 Where multiple Authorized Representatives are appointed, the entity member must clearly specify the portion of the capital contribution represented by each Authorized Representative. If the respective portions are not specified, the capital contribution shall be divided equally among all Authorized Representatives.13 

Notably, an Authorized Representative is simultaneously a member of the Members’ Council14 and is entitled to attend meetings, participate in discussions, and vote on matters within the authority of the Members’ Council corresponding to the capital contribution represented. In addition, the Authorized Representative is required to exercise the delegated authority honestly, prudently, and in the legitimate interests of the appointing entity member.15 

2. Distinguishing the number of Authorized Representatives from the voting rights of a member

In principle, the Law on Enterprises 2020 provides that the quorum for meetings of the Members’ Council and the voting thresholds for passing resolutions and decisions are determined primarily based on the capital contribution ratio of the members, rather than the number of Authorized Representatives.16 For example, a member holding 65% of the charter capital retains voting rights corresponding to its entire 65% capital contribution, regardless of whether it appoints one or several Authorized Representatives. Accordingly, increasing the number of Authorized Representatives does not alter the member’s management rights, control rights, or voting rights. Nevertheless, the Law on Enterprises 2020 recognizes several exceptional circumstances where decisions are made based on the approval of a majority of the members of the Members’ Council, including: 

  1. The election of a temporary Chairman of the Members’ Council where no member has been authorized or where the Chairman dies, is missing, is detained, is serving an imprisonment sentence, is subject to compulsory administrative measures, absconds, has limited or lost legal capacity, has difficulties in cognition or behavioral control, or is prohibited by a court from holding office or practising a profession;17 or 
  2. The approval of proposals to supplement the agenda of a Members’ Council meeting submitted immediately before the meeting commences.18 

Even so, these exceptions relate primarily to the procedural organization and operation of the Members’ Council, rather than decisions that directly affect the property rights or control rights of the company’s members. 

3. Key considerations for entity members

In addition to the provisions of the Law on Enterprises 2020, entity members should pay particular attention to the role of the Company Charter in determining the mechanism for Authorized Representatives. Although the law permits an entity member holding 35% or more of the charter capital to appoint up to 03 (three) Authorized Representatives, the Company Charter may validly prescribe a lower number. Accordingly, entity members should review the Company Charter before appointing or replacing an Authorized Representative. Furthermore, where multiple Authorized Representatives are appointed, the entity member should clearly specify the proportion of the capital contribution represented by each Authorized Representative. Otherwise, the capital contribution will automatically be divided equally among all Authorized Representatives, which may create uncertainty regarding the scope of each representative’s authority and the exercise of voting rights. 

It can therefore be seen that the Authorized Representative mechanism is designed to provide entity members with flexibility in exercising the rights attached to their capital contributions while maintaining transparent corporate governance. Nevertheless, entity members should clearly distinguish between the number of Authorized Representatives and a member’s voting rights, as management rights and decision-making authority within the company continue to be determined primarily based on the member’s capital contribution ratio. Reviewing the Company Charter and preparing a proper written appointment of Authorized Representatives will help entity members ensure that the company’s governance is carried out efficiently and in compliance with applicable law. 

(10) Article 14.1 of the Law on Enterprises 2020.

(11) Article 14.4 of the Law on Enterprises 2020.

(12) Article 14.2.a of the Law on Enterprises 2020.

(13) Article 14.3 of the Law on Enterprises 2020.

(14) Article 55.1 of the Law on Enterprises 2020.

(15) Article 15.2 of the Law on Enterprises 2020.

(16) Article 58, Article 59.3, Article 59.5 of the Law on Enterprises 2020.

(17) Article 56.4 of the Law on Enterprises 2020.

(18) Article 57.3 of the Law on Enterprises 2020. 

Submission date: July 4th 2026

Related posts

  1. Electronic Identification for FDI Enterprises: Are Two Legal Representatives Necessary?
  2. Share transfer to foreign investors: conditions and procedures to know

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.



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