The termination of operations of branches and representative offices is a significant decision for businesses, often driven by strategic, financial, or regulatory factors. This article explores the various circumstances under which such entities may cease operations, as well as the procedures and legal requirements involved in terminating them.
1. Cases of termination of operations of branches or representative offices
Pursuant to Clause 1, Article 213 of the 2020 Enterprise Law, a branch or representative office of an enterprise may terminate its operation in the following cases:
- Under a decision of the enterprise itself;
- Under a competent state agency’s decision on revocation of the operation registration certificate of the branch or representative office.
Clause 1, Article 77 of Decree No. 01/2021/ND-CP on Enterprise Registration stipulates that a branch or representative may have its operation registration certificate revoked in the following cases:
- Content declared in its operation registration dossier are forged: In this case, the business registration division shall issue a notice of violation of the enterprise and issue a decision to revoke the operation registration certificate of the branch or representative office.
- It has ceased its operation for 1 year without notifying such cessation to the business registration division and the tax office. In this case, the business registration division shall issue a notice of violation and request the at-law representative of the enterprise to give explanations at the business registration division.
- Under a court ruling or at the request of a competent agency in accordance with law. In this case, the business registration division shall issue a decision to revoke the operation registration certificate of the branch or representative office based on the court ruling.
The enterprise’s legal representative and the head of the branch/representative office that is shut down shall be jointly responsible for the accuracy and truthfulness of the application for shutdown of the branch or representative office.
The enterprise whose branch is shut down shall execute the contracts and pay the debts, including tax debts, of the branch and continue employing or fully provide lawful benefits for the branch’s employees as prescribed by law.
2. Procedures for terminating branch and representative office operations
In the case where a business decides to terminate the operations of its branch or representative office, it must follow the procedures specified in Article 72 of Decree 01/2021/ND-CP, as detailed below:
2.1. For branches and presentative offices within the country
Step 1: Fulfill tax obligations
According to Clause 1, Article 72 of Decree No. 01/2021/ND-CP, before notifying the termination of operation of a branch, representative office or business location, an enterprise and its branch or representative office shall register with a tax office for fulfilling its tax obligation in accordance with the tax laws.
Step 2: Send a notice of termination of operation of its branch, representative office
Within 10 days after deciding on termination, an enterprise shall send a notice to the business registration division of the locality where its branch, representative office is located.
The notice must be accompanied by:
- Resolution or decision and or a copy of minutes of the meeting on termination of operation of the branch or representative office of the Members’ Council (for a limited liability company with two or more members or a partnership);
- the Board of Directors (for a joint stock company);
- resolution or decision on termination of operation of the branch or representative office of the company owner (for a single-member limited liability company).
Step 3: Prepare and submit a dossier to terminate branches or representative offices
Within 10 days after deciding on termination, the enterprise must submit documents to the Business Registration Office. Depending on the locality, the enterprise can choose one of the following methods to submit the :
– Submit directly to the Business Registration Office – Department of Planning and Investment where the branch or representative operates, pay fees and charges and receive a direct receipt;
– Submit online with personal digital signature or business registration account at the National Business Registration Portal (https://dangkyquamang.dkkd.gov.vn);
– Submit by mail to the address of the Business Registration Office – Department of Planning and Investment where the branch or representative operates.
The required dossiers include:
- Notification of the termination of operations of the branch, representative office, or business location (using the form in Appendix II-20 attached to Circular 01/2021/TT-BKHDT).
- In the case of terminating the operations of a branch or representative office, the following documents must also be submitted along with the notification:
- Resolution, decision, and a copy of the meeting minutes of the Members’ Council for a limited liability company with two or more members, or a partnership company, regarding the termination of the branch or representative office.
- Resolution, decision, and a copy of the meeting minutes of the Board of Directors for a joint-stock company regarding the termination of the branch or representative office.
- Resolution, decision of the sole owner of the company for a one-member limited liability company regarding the termination of the branch or representative office.
- Authorization letter for submitting the documents if the person submitting is not the legal representative of the enterprise, along with a copy of one of the following legal documents of the authorized person (pursuant to Clause 1, Article 12 and Article 11 of Decree 01/2021/ND-CP):
- For Vietnamese citizens: Valid CCCD (Citizen Identity Card), ID card, or passport.
- For foreign nationals: Valid foreign passport or a valid document substituting the foreign passport.
Step 4: Get results
After receiving a dossier of operation termination of a branch, representative office, the business registration division shall send information on termination of the branch or representative office to a tax office.
Within 2 working days after receiving information, the tax office shall send its opinion on fulfillment of tax obligations by the branch or representative office to the business registration division.
If the tax office has no objection, the business registration division shall terminate operation of such branch or representative office in the national business registration database, and issue a notice of termination of operation of the branch or representative office.
2.2. For branches and representative offices abroad
The termination of operations of a business’s branch or representative office abroad must comply with the laws of the host country.
Within 30 days from the official termination of the branch or representative office abroad, the business must send a Notification of the termination of the branch or representative office abroad (using the form in Appendix II-21 attached to Circular 01/2021/TT-BKHDT) to the Business Registration Office where the business is headquartered.
The Business Registration Office will update the company’s information in the National Business Registration Database within 3 working days from the date of receipt of the notification.
The termination of operations of a branch or representative office, whether within the country or abroad, is a process governed by specific legal procedures outlined in Decree 01/2021/ND-CP and the 2020 Enterprise Law. Businesses must comply with the legal requirements for tax obligations, proper documentation, and timely notification to the relevant business registration authorities. Whether terminating operations domestically or internationally, businesses are responsible for ensuring that all legal, financial, and contractual obligations are fulfilled. By adhering to these procedures, enterprises can effectively close their branches or representative offices and maintain compliance with the law.
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