PROCEDURES FOR ESTABLISHING REPRESENTATIVE OFFICE OF FOREIGN TRADERS IN VIETNAM

by Admin

23/08/2021

Documentation & Knowledge

PROCEDURES FOR ESTABLISHING REPRESENTATIVE OFFICE OF FOREIGN TRADERS IN VIETNAM

The representative office (RO) of a foreign trader is a dependent unit, which is established to conduct market surveys, a number of commercial promotion activities, and other activities permitted by Vietnamese law. The foreign traders wanting to establish a RO in Vietnam shall apply for Licenses for the Establishment of representative offices in accordance with Vietnamese law. Dai Ha Thanh Law Firm hereinafter provides the Client with relevant regulations on the establishment and operation of the representative office of foreign traders in Vietnam.

Legal Basis:

  • Law on Commerce No. 36/2005/QH11: Article 16, 17, 18
  • Decree No. 07/2016/ND-CP detailed regulations on the establishment of representative offices or branches of foreign traders in Vietnam under laws of commerce: Article 5,7,10,11, 30, 34
  • Circular No. 11/2016/TT-BCT on forms prescribed in Decree No. 07/2016/ND-CP dated January 25, 2016, of the government on guidelines for the law on commerce in terms of representative offices and branches of foreign traders in Vietnam

I. Comparison between establishing a new company and establishing a RO of foreign traders

II. REGULATIONS ON ISSUING LICENSES OF ESTABLISHMENT OF REPRESENTATIVE OFFICE OF FOREIGN TRADERS IN VIETNAM

1. Requirements for Licenses of the establishment of representative offices

Foreign traders shall be granted Licenses for the establishment of RO if they are eligible to:

  • Incorporate and register for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or recognized by the aforesaid countries or territories;
  • Operate at least 01 years from the date of establishment or business registration;
  • The Certificate of Business Registration or the equivalent document is valid for at least 01 years from the date of submission of the application;
  • The scope of operation of the RO is consistent with Vietnam’s Commitments to treaties to which Vietnam is a signatory;
  • Where the scope of operation of the RO is inconsistent with Vietnam’s Commitments or the foreign trader is not located in the country or territory being a member to treaties to which Vietnam is a signatory, the RO can be established only if relevant Ministers, Heads of ministerial agencies (hereinafter referred to as “relevant Ministry”) have approved for the establishment of the representative office.

2. The competent authority granting Licenses for Establishment of RO

The competent authority (hereinafter referred to as “competent authority”) granting the License includes:

3. Documents for Licenses for Establishment of representative offices

Documents for License for Establishment of RO including:

4. Procedures for establishing a representative office of foreign traders in Vietnam

Step 1: Submit the application

DHT shall support the foreign traders to submit the application to The competent authority granting Licenses for Establishment of RO directly or by post or online (where applicable) 

Step 2: Examine the application and return the result

  1. In case the scope of operation of the RO is consistent with Vietnam’s Commitments to treaties to which Vietnam is a signatory:
  • Within 03 working days from the date of receipt of the application, the competent authority examines such application and request the applicant to complete the application (if there are any further requirements to prove the correctness of some documents). The request for supplementation to the application shall be made only once during the processing of such application.
  • Within 07 working days from the date of receipt of the valid application, the competent authority shall grant the License for the establishment of the representative office to the applicant. In case of rejection, the competent authority shall send the applicant a written notice in which reasons for rejections shall be specified.
  1. In case the scope of operation of the RO is inconsistent with Vietnam’s Commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, or the establishment of representative offices has not been prescribed by specialized legislative documents:
  • Within 03 working days from the date of receipt of the valid application, the competent authority shall submit a written request for directions to the relevant Ministry
  • Within 05 working days from the date of receipt of the request for directions from the competent authority, the relevant Ministry shall respond to the competent authority a written notification of whether or not they approve for the application
  • Within 05 working days from the date of receipt of the notification from the relevant Ministry, the competent authority shall grant the License for establishment of RO to the applicant. In case of rejection, the competent authority shall send the applicant a written notice in which reasons for rejections shall be specified.

III. SCOPE OF WORK, RIGHTS, AND LIABILITIES OF RO AND RO’S HEAD

1. Scope of work

The RO shall be confined to the conduct of liaison activities, market research, and promotion of its head office’s businesses, excluding services the establishment of the representative office in which is specified in specialized legislative documents.

2. Rights and obligations of representative offices and branches

Rights and interests of representative offices and branches shall be reserved during the operation in Vietnam under Vietnamese laws.

Representative offices shall have the rights to:

  • Operate for the purposes, within the scope and duration stipulated in their establishment licenses.
  • Rent offices, rent and purchase equipment, and facilities necessary for their operations
  • Recruit Vietnamese and expatriate employees to work for them according to the provisions of Vietnamese law.
  • Open accounts in foreign currencies or foreign currency-based Vietnam dong at banks licensed to operate in Vietnam and to be allowed to use those accounts solely for their operations
  • Have seals bearing their names according to the provisions of Vietnamese law.
  • Other rights as defined by law.

Obligations of representative offices include:

  • Not to directly conduct profit-generating activities in Vietnam.
  • To conduct commercial promotion activities within the scope permitted by this Law.
  • Not to enter into contracts, not to amend or supplement contracts already entered into by foreign traders, except where chief representatives obtain valid letters of authorization from foreign traders or other cases specified in Clauses 2, 3, and 4, Article 17 of Law on Commerce 2005.
  • To pay taxes, fees, and charges, and fulfill other financial obligations provided for by Vietnamese law.
  • To report on their operations according to Vietnamese law.
  • To have other obligations as defined by Vietnamese law.

3. Rights and Obligations of the head of RO

The Head of the representative office shall be responsible for his/her action and the operation of the representative office to his/her head office within the power of attorney.

The head of the representative office shall be responsible for his/her activities the scope of authorization.

In the absence of the head of the representative office from Vietnam, he/she shall grant another person the power of attorney that shall be made with the prior consent of the head office. However, the head of the representative office shall be responsible for exercising rights and obligations specified in the power of attorney. Upon the expiry of the power of attorney, if the head of the representative office has yet to return and no additional power of attorney is made, the currently authorized person shall be eligible for exercising rights and obligations as the head of the representative office within the scope of authorization until the head of the representative office or branch returns or the head office appoints another person as the new head of representative offices or branch.

If the head of representative offices or branch from Vietnam is absent from Vietnam for a period of longer than 30 days without any authorization, or if the head representative offices or branch is dead, missing, detained, sentenced to prison, or has no capacity for action, the head office shall appoint another person as the new head of representative offices or branch.

The head of a representative office shall not concurrently hold the following titles:

  • The head of a branch of the same foreign traders; 
  • The head of a branch of another foreign trader;
  • The legal representative of the same foreign trader or others;
  • The legal representative of a business organization is incorporated in accordance with the Laws of Vietnam.

If the head office authorizes the head of the representative office to sign, adjust, or supplement contracts, the head office shall grant the power of attorney for each conclusion, adjustment, and supplementation.