Criminal liability accrues to a commercial legal person if the violating act was performed (1) in the name of the legal person, (2) for the benefit of the legal person, (3) under the direction, management or approval of the legal person, and (4) the relevant statute of limitations has not expired. Criminal prosecution of a legal person does not exclude the possibility of individual criminal liability for acts committed.
Unfortunately, the penal code does not define many of these terms, and as they call up imagery from the civil code, we must turn there for an understanding of how a “commercial legal person” can act criminally. This is vital to understand exactly who can act criminally for a commercial legal person and thus understand what safeguards might be implemented to protect a commercial legal person and its owners from liability under the penal code.
The first criteria for criminal liability is that the illegal act must be done “in the name” of the legal person. I will take this in connection with the second criteria, which is that the act must be done “for the benefit” of the legal person. I do this because the civil code defines representation as the act of a person, or representative, “acting in the name and for the benefit of another person,” or the principal, to enter into or perform “a civil transaction within the scope of representation.”
This means that the first two criteria define representation. Criminal liability of a legal person, therefore, can only be imputed where Representation of a legal person exists. Representation can only exist between a legal person and a Representative through written authorization, decision of a competent authority, a charter or as prescribed by law.
Representatives, then, must have some form of authorization from the legal person before they can enter into or perform civil transactions in the name or for the benefit of the legal person. This would suggest that the legal person can control who may act on its behalf. The charter of a legal person must specify the individual(s) who may act as legal representatives of the legal person. The law on enterprises states that a commercial legal person may have one or more legal representatives but invariably the legal representative is a member of management. This means that management of a legal person can represent the legal person sufficiently to give rise to criminal liability. But what about an employee?
An employee is defined as “under the management and control” of their employer, though they are only to comply with the “lawful” orders of the employer. An employer is defined as the entity, or legal person, who hires or employs a worker, and the employer-employee relationship is governed by a written contract. This means that an employee has a direct relationship with the company and may be “authorized” in writing, according to the civil code, to act as Representatives of their employer.
To give rise to criminal liability, the act under investigation must be illegal, and Representatives are bound by the scope of their representation. That scope is limited by legality. If the principal demands an illegal act by the Representative, that act is deemed to be outside the scope of representation. Therefore any illegal act performed by the Representative on behalf of the Principal is outside the scope of the representation and cannot, in general, be imputed to the Principal.
This returns us to the third criteria for criminal liability of legal persons, the requirement that the act be done “under the direction, management, or approval” of the legal person. The first two are dispensed quickly. The word for “direction” used by the penal code is chỉ đạo. This does not appear a single time in the civil code and the only time it appears in the penal code is in the instance cited above. We are then left to look to Merriam Webster, which defines “direction” as “guidance or supervision of action or conduct.” This implies that the legal person gave an order for the illegal action.
The term “management” is used throughout the civil code to refer to the management structure of a legal person. While somewhat circular, this suggests that a Representative must be acting under the guidance of management of a legal person and thus “authorized” to act. Because of its relation to the actual management structure, it is easy to consider “management,” as used by the penal code, to suggest that the illegal act occurred within the ambit of the management personnel of the legal person.
Finally, approval of the acts of a Representative may be considered obtained under defined circumstances. Namely, If the legal person recognized the transaction, if the legal person knew about it and didn’t object, or if it is the legal person’s “fault that the other party does not know or is not able to know” that the person with whom they enter a civil transaction is not authorized by the legal person so to do.
All of this means that anyone from management to frontline employees of a legal person can be deemed a Representative of the legal person. And even though criminal liability invariably arises outside the scope of representation, the legal person can still be held liable if it can be shown to have recognized, known about and failed to repute, or through its own fault caused a third party to think it recognized or knew about the illegal transaction.
All of that’s great, but who is ultimately responsible for the legal person? In the end, who has to be shown to have acknowledged, somehow, the act giving rise to criminal liability? Here, too, we must look to the civil code. Legal persons are represented by Legal Representatives who are authorized according to the charter of the legal person. Thus, the Legal Representative of the legal person is the final arbiter of what the legal person recognized, knew, or caused to be expected. If it can be shown that the Legal Representative did any of these three things, regardless of any additional culpability by positive, criminal acts on the part of the Legal Representative, then the legal person is considered criminally liable. It should be made clear, at this point, that Legal Representatives are generally not held criminally liable for the acts of the legal person unless they themselves can be imputed in those illegal acts.
While doing nothing may seem like the ideal solution for the Legal Representative of a legal person, there are consequences, particularly if the legal person in question is a corporation. Legal Representatives are legally obliged to act under certain duties, and if they don’t fulfill those duties then they will be held personally liable for damage caused to the company. Perhaps foremost among those duties is the duty of honesty and prudence. That duty requires the Legal Representative to fulfill his responsibilities to the company, such as management activities, to the best of his ability. This suggests that a blissful ignorance of what the employees of the company are doing, and a decision to pretend as if he didn’t “know” about any illegal act, would in turn be a deliberate violation of this duty and open the Legal Representative to broad and potentially crippling civil liability.
It behooves the Legal Representative, then, to “honestly and prudently” go about “knowing” the acts, legal and illegal, of the Representatives of the company. Accountability tracking can be put in place by human resources—a topic I won’t address as I know nothing about it—and other solutions may present themselves as Vietnam’s corporate capabilities improve. I don’t know all the answers, but it is necessary to have some form of accountability to the Legal Representative of the company. There is no guidance on what degree of accountability will satisfy the “honest and prudent” standard in the law. But should an employee expose the company to criminal liability, it is in the Legal Representative’s best interests to have already established reporting mechanisms.
 Penal Code, Article 75.
 Civil Code Article 134.1
 Civil Code Article 135.
 Civil Code Article 77.
 Law on enterprises Article 134.2.
 2012 Labor Law Article 3.
 2012 Labor Law Article 5.2.
 2012 Labor Law Article 3.
 2012 Labor Law Article 15.
 Civil Code Article 141.
 Civil Code Article 142.
 Civil Code Article 77, 85.
 Law on enterprises Article 14.2.
 Law on enterprises Article 14.1.a.