Establishing a representative office or branch in Vietnam offers significant opportunities, but there are cases where licenses may be denied. This article outlines the common reasons for refusals, helping foreign traders understand potential challenges and ensure compliance with local regulations.
Legal basis
- The Law on Enterprise 2020;
- Decree No. 07/2016/ND-CP on detailing the Commercial Law regarding Vietnam-based representative offices and branches of foreign traders;
Conditions for grant of branch or representative office establishment licenses
Foreign traders can establish a branch or representative office in Vietnam if they fulfill the conditions specified in Article 8 of Decree No. 07/2016/ND-CP on Detailing the Commercial Law regarding Vietnam-based representative offices and branches of foreign traders:
- The foreign trader has been established or has registered its operation under the law of a country or territory being member to a treaty to which Vietnam is a contracting party or recognized by the law of such country or territory.
- The foreign trader has been operating for at least 5 years since its establishment or business registration.
- In case the foreign trader’s business registration certificate or equivalent paper indicates its term of operation, the remaining term must be at least one year by the date of submission of the application.
- Contents of operation of the branch must comply with Vietnam’s commitments to market access in treaties to which Vietnam is a contracting party and with the business lines of the foreign trader.
- In case contents of operation of the branch fail to comply with Vietnam’s commitments or the foreign trader is not located in a country or territory being member to a treaty to which Vietnam is a contracting party, the establishment of such branch shall be approved by the minister of the line ministry concerned.
Cases of non-grant of representative office or branch establishment licenses to foreign traders
Article 14 of Decree No. 07/2016/ND-CP stipulates that the licensing agency shall not grant to a foreign trader a representative office or branch establishment license in the following cases:
– Failure to meet any of the conditions specified in Article 7 of Decree No. 07/2016/ND-CP for applying for a Representative Office establishment license, or failure to meet any of the conditions specified in Article 8 of Decree No. 07/2016/ND-CP for applying for a Branch establishment license, including:
- The foreign trader has been established or has registered its operation under the law of a country or territory being member to a treaty to which Vietnam is a contracting party or recognized by the law of such country or territory.
- The foreign trader has been operating for at least one year since its establishment or business registration.
- In case the foreign trader’s business registration certificate or equivalent paper indicates its term of operation, the remaining term must be at least one year by the date of submission of the application.
- Contents of operation of the branch/ representative office must comply with Vietnam’s commitments in treaties to which Vietnam is a contracting party.
- In case contents of operation of the branch/ representative office fail to comply with Vietnam’s commitments or the foreign trader is not located in a country or territory being member to a treaty to which Vietnam is a contracting party, the establishment of such branch/ representative office shall be approved by the minister of the ministry or the head of the ministerial- level agency performing the specialized management of the sector concerned (below referred to as the minister of the line ministry).
– The foreign trader applies for a representative office or branch establishment license within 2 years after its license for establishment of a Vietnam-based representative office or branch is revoked under Article 44 of this Decree, including failing to:
- Operate for 1 year and failing to enter into transactions with the licensing agency;
- Report on its operation for 2 consecutive years;
- Send reports under Clause 2, Article 32 of this Decree to the licensing agency within 6 months from the deadline for submission or from the time of receiving a written request;
- Other cases as prescribed by law;
– The establishment of representative office or branch is restricted for reasons of national defense, security, social order and safety, social morality and community well-being.
– Other cases as prescribed by law.
In conclusion, foreign traders may be denied a representative office or branch license if they fail to meet the conditions set by Decree No. 07/2016/ND-CP, such as non-compliance with operational requirements or legal obligations. Additionally, factors like security concerns or failure to meet reporting requirements can also lead to rejection of the application.
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