The sustained growth of a business heavily relies on its management team. Operating a business in a manner that ensures continuous development and sustainability demands that managers possess not only economic expertise but also a certain level of legal knowledge.

In this article, CDLAF provides an overview of the fundamental legal responsibilities that corporate managers need to understand.

1. Understanding about Corporate Managers

A corporate manager is an individual recognized by law or elected or appointed to a managerial position within a business to oversee its daily production and business activities or to shape its long-term direction. Pursuant to Clause 24, Article 4 of the Enterprise Law 2020, a corporate manager is defined as: “is a private business manager and corporate manager including the owner of the private enterprise, a general partner, Chairman of the Members’ Council, member of the Members’ Council, President of a company, Chairman of the Board of Directors, member of the Board of Directors, Director or General Director, and other individuals holding managerial positions as stipulated in the company’s Charter.” Thus, in addition to the positions explicitly listed in the Enterprise Law, a corporate manager may also include individuals holding other managerial roles as specified in the company’s Charter.

It should also be noted that not all corporate managers are automatically deemed legal representatives of the company. According to the provisons of the law on enterprise, except in the cases of partnerships (where general partners serve as legal representatives) and private enterprises (where the owner acts as the legal representative), limited liability companies and joint-stock companies may have one or more legal representatives. The number, managerial titles, rights, and obligations of legal representatives must be clearly stipulated in the company’s Charter. Accordingly, these types of companies may designate one or several legal representatives, and not all managers are inherently legal representatives unless explicitly named in the Charter and duly registered with the business registration authority.

2. Legal Responsibilities of Corporate Managers

The legal responsibility of a corporate manager can be understood as the adverse legal consequences that an individual or entity must bear when violating the law. Under this approach, legal responsibility is tied to unlawful acts, meaning legal consequences arise when a specific violation occurs. However, beyond violations of the law, legal responsibility may also stem from other legal obligations, such as contractual commitments or statutory provisions. In the realm of corporate governance, a manager’s legal responsibilities may arise from employment contracts, the company’s Charter, and applicable legal provisions. Depending on the scale, nature, and specific characteristics of a given company, it may establish principles and legal responsibilities to bind its managers.

The Enterprise Law outlines the responsibilities of managers corresponding to different business types under Articles 71, 83, and 165 of the Enterprise Law 2020. Generally, the responsibilities of corporate managers encompass the following key aspects:

First, corporate managers must exercise their assigned rights and obligations honestly, prudently, and to the best of their ability to ensure the maximum legitimate interests of the company. The terms “honestly, prudently, and to the best of their ability” are not explicitly defined in the law but may be interpreted as requiring managers to wholeheartedly serve the company, steer its operations in the best possible direction, and refrain from pursuing personal gain or causing harm to the company. Beyond these requirements, a company may establish additional principles or standards in its Charter or internal regulations to further bind managerial responsibilities.

Second, managers must remain loyal to the interests of the company and its members, shareholders, or owners. They are prohibited from abusing their position or authority, or using the company’s information, secrets, business opportunities, or assets for personal gain or to benefit other individuals or organizations. This provision aims to bind managers, preventing them from exploiting the authority entrusted to them by owners to access and misuse confidential information, secrets, business opportunities, or company assets, thereby causing significant harm to the company and its owners.

Third, managers are obligated to fully and accurately disclose to the company details of any enterprise they own, hold shares or capital contributions in; and of any enterprises in which their related persons are the owner, co-owner, or sole owner of contributed capital or shares, in accordance with the provisions of law.

Fourth, managers must comply with the company’s Charter, the Enterprise Law, other relevant legal provisions; and Resolutions or Decisions of the ownership body. In the context of corporate governance broadly, and commercial operations specifically, to safeguard the freedom of business, the Enterprise Law and related regulations provide only general and mandatory principles, while the company’s Charter may flexibly adjust certain provisions, allowing owners, members, or shareholders to tailor governance rules based on the company’s operational circumstances and capital structure.

In cases where a manager fails to fulfill their responsibilities or duties, or engages in unlawful conduct, they may face the following sanctions:

Civil Liability: In the event that a company manager breaches the aforementioned obligations, they may be held personally liable (for individual actions) or jointly liable (for collective decisions) to compensate for lost benefits, return any benefits received, or indemnify the company and third parties for any damages incurred.

Criminal liability: In addition to civil compensation, a manager may also be subject to criminal prosecution for criminal acts committed within the enterprise under their management. In cases where the enterprise is held criminally liable, any individual who directly directed or carried out the violating acts may also bear corresponding liability, depending on the degree of their involvement.

The above provides an overview of the legal responsibilities of corporate managers. To ensure sustainable development, managers must act transparently, comply with the law, and diligently fulfill their obligations.

Time of writing: 10/03/2025

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

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