Establishing a branch or a representative office of a foreign trader in Vietnam can be a strategic move for expanding business operations. However, the process involves meeting specific conditions, preparing a detailed dossier, and following a set procedure to ensure full compliance with Vietnamese regulations. This article provides an overview of these key steps, offering practical guidance for foreign traders looking to set up a branch or a representative office in Vietnam.
Conditions for grant of branch or representative office establishment licenses
Foreign traders may be has been licensed to be establish a branch or a representative office when meeting the following conditions as prescribed 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.
Note: A foreign trader may establish no more than one representative office bearing the same name in the same province or centrally run city. (Pursuant to Clause 2, Article 3 of Decree No. 07/2016/ND-CP)
Dossier of application for branch or representative office establishment licenses
Pursuant to Article 12 of Decree No. 07/2016/ND-CP, the dossier shall comprise:
- An application for a branch or representative office establishment license, made according to a form set by the Ministry of Industry and Trade and signed by the foreign trader’s competent representative;
- A copy of the business registration certificate or equivalent paper of the foreign trader;
- The foreign trader’s document on appointment of head of the branch/ representative office;
- Copies of audited financial statements or documents proving the fulfillment of tax liabilities or financial obligations in the latest fiscal year or equivalent paper issued or certified by a competent agency or organization of the locality where the foreign trader was established proving the actual existence and operation of the foreign trader in the latest fiscal year;
- A copy of the branch/ representative office’s operation charter;
- A copy of the passport, people’ identity card or citizen’s identity card (for a Vietnamese) or a copy of the passport (for a foreigner) of the head of the branch/ representative office;
- Documents on the expected location of the branch/ representative office’s office, comprising:
- A copy of the memo of understanding or location rental agreement or documents proving the right to use the location for the branch/ representative office’s office;
- A copy of the document on the expected location of the branch/ representative office’s office under Article 28 of this Decree and relevant laws.
Order and procedures for grant of branch or representative office establishment licenses
The order and procedures for establishing a branch or a representative office of a foreign company according to the instructions in Article 13 of Decree No. 07/2016/ND-CP are as follows:
Step 1: The foreign submits the application directly, by post or online (if applicable) to the Ministry of Industry and Trade.
Step 2: Within 03 working days after receiving the dossier, the Ministry of Industry and Trade checks and requests additional documents if the dossier is not complete and valid.
The request for supplementation to the dossier shall be made only once during the handling of the dossier.
Step 3: Within 07 working days after receiving complete and valid documents, the Ministry of Industry and Trade shall grant to the foreign trader a branch establishment license or refuse to grant it.
In case of refusal, there must be a written statement clearly stating the reason.
Step 4: In case the branch/ representative office’s operational content is not regulated in any specialized legal document, the Ministry of Industry and Trade shall send a written request to the concerned line ministry for opinion within 03 working days from the date of receipt of complete and valid documents.
Within 5 working days after receiving the request, the line ministry shall issue a document stating its opinion on the grant of the license.
Within 5 working days after receiving line ministry’s reply, the licensing agency shall grant to the foreign trader a branch/ representative office establishment license or refuse to grant it. In case of refusal, the licensing agency shall issue a document clearly stating the reason.
Effective periods of Licenses for Establishment of branches or representative offices.
According to Article 9 of Decree 07/2016/ND-CP, effective periods of Licenses for Establishment of branches or representative offices is as follow:
– The License for Establishment of a representative office or branch shall be valid for 05 years but not exceeding the remaining effective period of the Certificate of Business Registration or the equivalent (for documents having expiry date).
– The effective period of an extended License for Establishment of the representative office or branch shall be equal to that of the current license.
– The extension of the license or establishment of the representative office or branch shall comply with clause 1 hereof.
Can the Head of a foreign trader’s branch/representative office also be the owner of a private enterprise in Vietnam?
According to Clause 8, Article 33 of Decree No. 07/2016/ND-CP regarding the head of a branch or representative of a foreign trader, the following regulations apply:
“The head of a branch shall not concurrently hold the following titles:
a) The head of a representative office of another foreign trader;
b) The head of a representative office of the same foreign trader;
c) The legal representative of a business organization incorporated under Laws of Vietnam.”
According to Clause 3, Article 190 of the 2020 Enterprise Law, the provisions regarding the owner of a private enterprise are as follows:
“The sole proprietorship’s owner is its legal representative who will represent it during civil proceedings, as the plaintiff, defendant or person with relevant interests and duties before the court and arbitral tribunals, and in performance of other rights and obligations prescribed by law.”
Based on the above regulations, the head of a foreign trader’s branch or representative office is not allowed to concurrently serve as the legal representative of an economic organization established under Vietnamese law. Therefore, they are not permitted to be the owner of a private enterprise in Vietnam.
In conclusion, foreign traders can establish a branch or representative office in Vietnam if they meet certain conditions outlined by law. However, the head of a foreign trader’s branch or representative office cannot simultaneously be the owner of a private enterprise in Vietnam, as this would conflict with the legal requirements for both roles.
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