A Chinese company hiring a Vietnamese director — what contracts are needed, and how should authorization be structured to stay compliant and control risk? This article analyzes two parallel legal relationships: the managerial position (Enterprise Law) and the labor contract (Labor Code).
1. Distinguish: Director vs Legal Representative
| Criterion | Director/General Director | Legal Representative |
|---|---|---|
| Nature | Managerial position, daily operations | Represents the company in transactions and litigation |
| Appointment | Members’ Council/Board (Articles 63/162, Enterprise Law) | Charter / owner’s decision |
| Can be the same person? | Yes — but they can also be separated to spread risk | |
Common mistake: conflating “director” with “legal representative.” A person may be a director but not the legal representative — their signature then does not bind the company externally without authorization.
2. Labor Contract with the Vietnamese Director
- Contract type: definite/indefinite-term labor contract (Articles 13, 20, Labor Code 45/2019).
- Probation: up to 180 days for managerial positions (Article 21).
- Recommended clauses: job description, KPIs, salary + bonuses, confidentiality, post-employment non-compete, handover on termination.
- Insurance: full social, health, and unemployment insurance under Vietnamese law.
3. Power of Attorney: Define the Scope
Authorization for the director should be in writing, specifying:
- Scope: which contract types may be signed, maximum value limits.
- Banking: transfer limits, account opening/closure.
- Litigation: representation before courts and arbitration.
- Duration and termination conditions.
- Sub-delegation: only if expressly permitted.
4. Common Risks and Prevention
- Oral authorization: unenforceable in disputes — always put it in writing.
- Exceeding authority: transactions may be void; set clear limits and over-limit approval mechanisms.
- On termination: revoke authorization in writing, notify banks/counterparties, hand over seals — accounts — dossiers.
5. Legal Representative Liability (Law 76/2025)
The amended Enterprise Law (Article 13) expands the liability of legal representatives. If the director is also the legal representative, the Chinese company should understand this person’s personal liability in statutory cases.
Note: This article summarizes current regulations for reference. For specific cases, consult a corporate lawyer.
Transparency: This article was researched and drafted by the AI Legal Council from original legal texts, through independent cross-checking. Content is for reference only and does not replace legal advice from a licensed lawyer.