CONSULTATION, DOCUMENT DRAFTING FOR DELEGATION OF AUTHORITY AND AUTHORIZATION

Facts of the Case:

HC Company, headquartered in Ho Chi Minh City, has established a branch in Hanoi. To facilitate operations, HC Company wishes to delegate and authorize the Hanoi Branch Director to enter into contracts, recruit employees, and manage the daily operations of the branch.

Client’s Request:

To mitigate potential risks associated with large-value contracts, HC Company intends to circumscribe the authority of its branch manager to enter into contracts. Specifically, the company wishes to limit the branch manager’s authority to contracts not exceeding VND 3,000,000,000 in value. HC Company requests TAPHALAW to provide legal counsel and prepare the necessary legal documents to implement this limitation.

Attorney’s Work Performed:

The attorney has reviewed the legal regulations and found that Clause 5, Article 85 of the Civil Code 2015 stipulates: “The head of a branch or representative office shall perform their duties pursuant to the authorization of the legal entity within the scope and term of such authorization.” Accordingly, for the Branch Director to be able to manage the operations at the branch, HC Company must grant authorization to the Branch Director.

The authorization of the Company to the Branch Director in this case can be done through the following options: (i) Through an internal regulation on the delegation of authority to the Branch Director; or (ii) Through the issuance of an appointment decision, which also includes a note on the delegation of authority to the Branch Director; or (iii) After the appointment of the Branch Director, the Company can delegate authority to the Branch Director through a separate authorization document.

The attorney has advised HC Company on the advantages and disadvantages of each of the above options for HC Company to consider and choose based on its desires, aspirations, and current circumstances.

Consultation Outcome:

At the request of HC Company, TAPHALAW Attorneys drafted an Authorization Document for the Director of the Hanoi Branch, incorporating provisions related to delegated management authority and transaction authorization to facilitate the management and operation of the branch’s business activities. In this authorization document, TAPHALAW Attorneys proposed that HC Company include certain exceptions and regulations to limit the “division” of transaction values, thereby helping HC Company mitigate potential risks.

During the course of its operations, HC Company has reported that the legal advice provided has enabled the Company to effectively control the signing of large-value contracts by the Director of the Hanoi Branch, while ensuring the smooth operation of the branch.