Contract Signing Authority in Companies

Why “who signs” matters as much as “what is signed”

When a dispute arises, “the signatory lacked authority” is one of the most frequently used arguments to escape a contract. If that argument succeeds, a company may find itself in this position: it has fully performed its obligations, yet the counterparty is not bound by the signature of the very representative it appointed. Conversely, a company may also find itself “locked into” a commitment that the signatory exceeded the scope of — simply because the company failed to object in time.

Signing authority is therefore what makes a signature on a contract truly represent the company’s will. Understanding the legal framework correctly helps a company protect itself in both directions: when it is the signing party (ensuring the signatory has authority) and when it is the receiving party (checking the counterparty’s signatory’s capacity).

The legal representative: the person with inherent signing authority

Under Article 12.1 of the Law on Enterprises 2020, the legal representative of an enterprise is the individual who represents the enterprise in exercising the rights and performing the obligations arising from the enterprise’s transactions. This is the person with inherent signing authority — no authorisation document is needed; their signature is the company’s signature.

On the civil side, Article 137 of the Civil Code 2015 provides that the legal representative of a juridical person includes: a person designated by the juridical person in accordance with its charter; a person competent to represent under the law; and a person designated by the Court in the course of proceedings. In an enterprise, depending on its type, this person may be the Chairman of the Board of Directors, the General Director/Director, or the Chairman of the Members’ Council — as determined by the Charter.

Inherent signing authority comes with heavy responsibility. Article 13 of the Law on Enterprises 2020 requires the legal representative to exercise their rights and perform their obligations honestly and prudently in the enterprise’s interests; and to bear personal liability for damage caused to the enterprise through their violations. The amended Law on Enterprises 2025 (Law No. 76/2025/QH15, effective from 01/07/2025) further strengthens this personal liability.

A company may have multiple legal representatives (Article 137.2 of the Civil Code 2015; Article 12.2 of the Law on Enterprises 2020) — a common model in FDI companies, where the Charter often recognises both the Chairman of the Board of Directors and the General Director. In that case the Charter must specify each person’s rights and obligations; if the division is unclear, each person is a fully authorised representative in relation to third parties. Best practice: the Charter should state clearly who signs which types of transactions, and when dealing with a counterparty that has multiple legal representatives, ask for their Charter to identify the person with authority.

Signing by authorisation: how to draft it tightly

Every other individual in the enterprise — Deputy General Directors, division heads, department heads, branch directors — may only sign in the company’s name with a valid written authorisation (Articles 135 and 138 of the Civil Code 2015). A sufficiently tight authorisation document must contain:

• The authorising party and the authorised person clearly identified (full name, title, and the basis of the authorising party’s authority).
• The specific scope of authorisation: the types of transactions that may be signed, value limits, and whether signing appendices, acceptance minutes, or liquidation minutes arising from the contract is included.
• The term of authorisation: a specific start and end date. An open-ended authorisation creates risk when the authorised person leaves and the document has not been revoked.
• Sub-authorisation: state clearly whether the authorised person may further delegate to others. If unstated, sub-authorisation may raise disputes over validity.

The two most common mistakes: authorising by word of mouth or vague email, and forgetting to revoke the authorisation document when the authorised person leaves or changes position. Good practice is to maintain a register of all authorisation documents currently in force, with alerts before expiry, and to revoke immediately when personnel change.

Consequences of signing beyond authority

This is the part enterprises need to master, because it determines the “price” of an unauthorised signature. The Civil Code 2015 deals with two situations:

• A person with no representative authority at all who nonetheless concludes a transaction (Article 142): the transaction does not create rights or obligations for the enterprise, unless the enterprise recognises it; a good-faith counterparty may require the person who concluded the transaction to perform the obligation and compensate for damage.
• A person with representative authority who exceeds its scope (Article 143): the transaction does not create rights or obligations of the enterprise for the excess portion — unless the enterprise agrees, the enterprise knew but did not object within a reasonable time, or the enterprise was at fault in leaving the counterparty unaware of the excess.

The crux in practice: “knew but did not object within a reasonable time”. Many enterprises discover that their people signed beyond authority but stay silent to protect the relationship with the counterparty — that silence may be interpreted as ratification. When excess authority is discovered, the enterprise must object in writing immediately.

The company seal: does it still matter after 01/01/2021?

From 01/01/2021, the Law on Enterprises 2020 (Article 43) abolished the seal-specimen notification procedure: enterprises decide for themselves the type, quantity, form, and content of their seals; a seal includes one made at an engraving establishment or a seal in the form of a digital signature under the law on electronic transactions. Management and custody of seals follow the Charter or regulations issued by the enterprise.

This means the seal is no longer a condition for a contract’s validity as a general rule — the signature of an authorised person suffices. However, if the contract itself provides that it “takes effect when signed and sealed”, the missing seal may still cause disputes — so avoid this clause or state clearly that effectiveness runs from signing.

For enterprises going digital, the digital signature of the legal representative or an authorised person is the substitute for a physical seal, with equivalent legal validity under the Law on Electronic Transactions 2023.

How to verify the counterparty’s signatory capacity before signing

On the other side — when receiving commitments — the enterprise must verify the counterparty’s signatory before signing, not after a dispute has arisen:

• The Enterprise Registration Certificate: confirm the exact legal name, enterprise code, operating status, and the current legal representative.
• The company Charter (provisions on the legal representative and authority): determine whether the signatory is entitled to sign this type of transaction and up to what limit.
• The authorisation document (if the signatory is not the legal representative): check the scope, term, whether the authorising party had authority to authorise, and that the document is in force at the time of signing.
• Special circumstances: whether the counterparty is in dissolution or bankruptcy, has had its licence revoked, or its legal representative is subject to restrictions.

For high-value transactions, requiring the counterparty to provide this legal dossier should be a mandatory step in the signing approval process — and the dossier should be filed together with the contract.

FDI practice: expatriate General Directors and powers of attorney

In FDI enterprises, the legal representative or General Director is often a foreigner who does not reside in Vietnam:

• Remote signing: a contract signed by the General Director while abroad — agree on the signing form (digital signature, scanned signature with originals to follow) and state clearly in the contract when it takes effect, to avoid disputes over “no original signature”.
• Authorising the local manager: when the General Director is absent for an extended period, a written authorisation to the manager in Vietnam is essential so signing is not interrupted. The POA should be bilingual, stating the scope and term clearly.
• Senior personnel changes: the gap between the former representative’s departure and the new representative’s registration is a high-risk period — transitional authorisation arrangements are needed, with timely update of the change registration.

For foreign investors newly entering Vietnam, we usually recommend building from the outset a delegation of authority matrix — a document setting out clearly who may decide and sign up to what limits. See details in Delegation of Authority Matrix in Enterprises.

Safe signing in practice: the pre-signature process

Consolidated into a concise process, applied to each material contract:

• Step 1: Identify our signatory — are they the legal representative? If not, is the authorisation document in force and does it cover this transaction?
• Step 2: Check limits — does the contract value exceed the signatory’s authority under the Charter and delegation documents? If so, has the competent level (Board of Directors, Members’ Council) approved?
• Step 3: Verify the counterparty — is the legal dossier (Enterprise Registration Certificate, Charter, authorisation) complete and in force?
• Step 4: Agree on signing form — in-person, digital, or scanned signature; number of copies; time of effectiveness; whether a seal is required.
• Step 5: Filing — the signed contract together with all authorisations and approvals is filed centrally, with the signing date and signatory recorded.
• Step 6: Monitoring — enter authorisation documents into an expiry-tracking register; update immediately on personnel or Charter changes.

This process should be documented as part of the enterprise’s governance regulations. Once habitual, every signature has a clear basis — and that is the cheapest way to prevent authority disputes.

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