Many foreign-invested companies appoint legal representatives who are either personnel from the parent company or experienced foreign managers responsible for key decisions and corporate governance in Vietnam. In the era of globalization and advanced technology, it has become increasingly common for such individuals to manage companies remotely—handling operations online without being physically present in Vietnam. However, this practice raises a key legal issue: whether a foreign legal representative (“LR”) must obtain a work permit (“WP”) under Vietnamese law, especially given strict requirements concerning residency for LRs.
1. Legal framework
A foreign LR working in Vietnam is generally required to obtain a WP, unless they fall under the exemptions set out in Article 154 of the 2019 Labor Code.4 If the LR performs work exclusively online and does not enter Vietnam, he/she may be deemed not to be “working in Vietnam” and therefore not subject to WP requirements.
However, under Article 12.3 of the Law on Enterprises 2020, a company must always have at least one legal representative residing in Vietnam. If the designated legal representative is abroad, they must issue a written authorization to another individual residing in Vietnam to exercise their rights and obligations as the LR.
In addition, if the company has only one LR, that individual must register a residential address in Vietnam as part of the enterprise registration dossier. This information will also be recorded on the company’s Enterprise Registration Certificate.
As such, even if the LR manages the business online from abroad, the labor authorities may determine—based on the company’s registration documents—that the individual resides and works in Vietnam, thereby requiring a WP.
2. Legal consequences
If a company has no LR residing in Vietnam, it may be subject to: (i) an administrative fine ranging from VND 20,000,000 to VND 30,000,000; and (ii) an obligation to register a new legal representative who resides in Vietnam.5
If the company’s sole legal representative does not hold a WP, both the company and the representative may face the following legal consequences:6
The company may be fined between VND 60,000,000 and VND 90,000,000; and
The LR may be fined between VND 15,000,000 and VND 25,000,000 and could be expelled from Vietnam if currently residing in the country.
3. Recommendation
The current Law on Enterprises allows companies to register multiple LRs. Accordingly, if a company has only one foreign LR who cannot reside in Vietnam on a regular basis, it may register an additional LR – either a Vietnamese national or a foreigner who can frequently reside in Vietnam. Appointing a second LR helps the company comply with Vietnamese laws without being required to apply for a WP for the first LR.
To ensure clarity and effective internal governance, the company’s charter should clearly define the rights and responsibilities of each LR. These provisions may include allocation of managerial responsibilities, authority over strategic decisions, and handling of business operations.
Having a LR named on the Enterprise Registration Certificate who does not reside in Vietnam is common – especially for foreign-invested companies. While this arrangement is understandable and facilitated by modern technology, companies must exercise caution to avoid breaching corporate and labor regulations. Appointing a second LR who resides in Vietnam can be a practical solution to ensure compliance without encountering legal obstacles regarding WP requirements.
(4) Point d Clause 1 Article 151 Labor Code 2019.
(5) Article 51 và Điều 4.2 Nghị định 122/2021/ND-CP.
(6) Article 32 and Article 6.1 Decree 12/2022/ND-CP.
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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.
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Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Employment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.
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