Legal basis

Law Commercial 2005

Decree No. 07/2016/ND-CP dated January 25, 2016 detailed regulations on establishment of representative offices or branches of foreign traders in Vietnam under laws on Commerce

1. Representative office of a foreign trader

1.1. Definition of representative office of a foreign trader

According to Article 3.6 of the Law Commercial 2005, Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.

1.2. Activities that Representative Offices are allowed to perform

According to Article 17 of the Law Commercial 2005 regulated that:

• To operate for the purposes, within the scope and duration stipulated in their establishment licenses.
• To rent offices, rent and purchase equipment and facilities necessary for their operations.
• To recruit Vietnamese and expatriate employees to work for them according to the provisions of Vietnamese law.
• To 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.
• To have seals bearing their names according to the provisions of Vietnamese law.
• To have other rights as defined by law.

1.3. Activities that Representative Offices are not allowed to perform

According to Article 18.1, 18.3 and 118.2 of the Law Commercial 2005 regulated that:

• Not to directly conduct profit-generating activities in Vietnam.
• 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 this Law.
• Representative offices of traders shall not be allowed to directly display and introduce goods and/or services of traders they are representing, except for displays and introductions at their offices. When being authorized by traders, representative offices shall have the right to enter into contracts with traders providing goods/service display and introduction services for the display and introduction of goods and/or services of traders they are representing.

1.4. Requirements for grant of Licenses for Establishment of representative offices

According to Article 7 of the Decree No. 07/2016/ND-CP dated January 25, 2016 regulated that:

Foreign traders shall be granted Licenses for Establishment of representative offices if they satisfy the following requirements:

• The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;
• The foreign trader has come into operation for at least 01 year from the date of establishment or registration;
• The Certificate of Business Registration or the equivalent document is valid for at least 01 more year from the date of submission of the application;
• The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory;
• Where the scope of operation of the representative office 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, the representative office can be established only if relevant Ministers, Heads of ministerial agencies (hereinafter referred to as “relevant Ministers”) have given approval for establishment of the representative office.

1.5. Applications for Licenses for Establishment of representative offices

According to Article 10 of the Decree No. 07/2016/ND-CP dated January 25, 2016 regulated that:

• An application for License for Establishment of a representative office:
• An application form for License for Establishment of the representative office using the form promulgated by the Ministry of Industry and Trade and signed by a competent representative of the foreign trader.
• Copies of the Certificate of Business Registration or equivalent documents of the foreign trader;
• A letter of appointment of the head of the representative office;
• Copies of audited financial statements or certificates of fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established;
• Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the representative office;
• Documents on the expected location of the representative office including:
  • Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the representative office;
  • Copies of documents on the expected location of the representative office in accordance with provisions of Article 28 hereof and related laws.

Documents specified in points b, c, d and dd, clause 1 of this Article (for the head of the representative office being foreigners) shall be translated into Vietnamese and certified true in accordance with laws of Vietnam. Documents specified in point b, clause 1 of this Article shall be certified or legalized by overseas diplomatic missions or Consulates of Vietnam under laws of Vietnam

1.6. Procedures for grant of Licenses for Establishment of representative offices

According to Article 11 of the Decree No. 07/2016/ND-CP dated January 25, 2016 regulated that:

• The foreign trader shall submit the application to the licensing agency where the representative office is expected to be located directly or by post or online (where applicable) .
• Within 03 working days from the date of receipt of the application, the licensing agency shall examine such application and request the applicant to complete the application (if the application is incomplete) . The request for supplementation to the application shall be made only once during the processing of such application.
• Apart from those specified in clause 4 of this Article, the licensing agency shall send the applicant a written notification of whether the license or establishment of the representative office is granted or not within 07 working days from the date of receipt of the valid application. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.
• For those specified in clause 5, Article 7 hereof and the establishment of representative offices that has not prescribed by specialized legislative documents, the licensing agency shall submit a written request for directions to the relevant Ministry within 03 working days from the date of receipt of the valid application. Within 05 working days from the date of receipt of the request for directions from the licensing agency, the relevant Ministry shall submit the licensing agency 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 licensing agency shall send the applicant a written notice of whether the License for Establishment of the representative office is granted . In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.

2. Branch of a foreign trader

2.1. Definition of branch of a foreign trader

According to Article 3.7 of the Law Commercial 2005, Vietnam-based branch of a foreign trader means a dependent unit of the foreign trader, which is established and conducts commercial activities in Vietnam under the provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.

2.2. Activities that Branch of a foreign trader are allowed to perform

According to Article 19 of the Law Commercial 2005 regulated that:

• To rent offices, rent and purchase equipment and facilities necessary for their operations.
• To recruit Vietnamese and expatriate employees to work for them according to Vietnamese law.
• To enter into contracts in Vietnam in compliance with their operation contents specified in their establishment licenses and the provisions of this Law.
• To open Vietnam dong accounts and foreign-currency accounts at banks licensed to operate in Vietnam.
• To transfer profits overseas according to the provisions of Vietnamese law.
• To have seals bearing their own names according to the provisions of Vietnamese law.
• To conduct activities of goods purchase and sale and other commercial activities in compliance with their establishment licenses according to the provisions of Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.
• To have other rights provided for by law.

2.3. Requirements for grant of Licenses for Establishment of branches

According to Article 8 of the Decree No. 07/2016/ND-CP dated January 25, 2016 regulated that:

Foreign businesses shall be granted Licenses for Establishment of branches if they satisfy the following requirements:

• The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;
• The foreign trader has come into operation for at least 05 year from the date of establishment or registration;
• The Certificate of Business registration or equivalent document is valid for at least 01 more year from the date of submission of the application;
• The scope of operation of the branch is conformable with Vietnam’s Commitments to market access stipulated in treaties to which Vietnam is a signatory shall be consistent with lines of business of the foreign trader;
• Where the businesses of the representative office is inconsistent with Vietnam’s Commitments or the foreign trader is not located in one of countries or territories being parties to treaties to which Vietnam is a signatory, the representative office can be established only if they obtain a prior consent of the relevant Minister for establishment of the representative office.

2.4. Applications for Licenses for Establishment of branches

According to Article 12 of the Decree No. 07/2016/ND-CP dated January 25, 2016 regulated that:

• An application for the license for establishment of the branch of a foreign trader shall include :
  • An application form for license for establishment of the branch using the form promulgated by the Ministry of Industry and Trade and signed by a competent representative of the foreign trader.
  • Copies of the Certificate of Business Registration or equivalent documents of the foreign trader;
  • A letter of appointment of the head of the branch;
  • Copies of audited financial statements or certificates of fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established;
  • Copies of the branch charter;
  • Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the branch;
  • Documents on the expected location of the branch including:
    • Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the branch;
    • Copies of documents on the expected location of the branch under Article 28 hereof and provision of related laws.

Documents specified in points b, c, d and dd, Article 1 hereof (for the head of the branch being foreigners) shall be translated into Vietnamese and certified true in accordance with laws of Vietnam. Documents specified in point b, clause 1 of this Article shall be certified or legalized by overseas diplomatic missions or Consulates of Vietnam in accordance with laws of Vietnam.

2.5. Procedures for Licenses for Establishment of branches of foreign traders

According to Article 13 of the Decree No. 07/2016/ND-CP dated January 25, 2016 regulated that:

• The foreign trader shall submit their application to the licensing agency where the representative office is expected to be located directly or by post or online (where applicable).
• The licensing agency shall examine such application and request the applicant to complete their application within 03 working days from the date of receipt of the application (if the application is incomplete) . The request for supplementation to the application shall be made only once during the processing of such application.
• Apart from those specified in clause 4 of this Article, the licensing agency shall send the applicant a written notification of whether the license or establishment of the branch is granted or not within 07 working days from the date of receipt of the valid application. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.
• For those specified in clause 5, Article 8 hereof and the establishment of branches that has not been prescribed by specialized legislative documents, the licensing agency shall submit a written request for directions to the relevant Ministry within 03 working days from the date of receipt of the valid application. Within 05 working days from the date of receipt of the request for directions from the licensing agency, the relevant Ministry shall submit the licensing agency a written notification of whether or not they approve for the application for the License for Establishment of the branch. Within 05 working days from the date of receipt of the notification from the relevant Ministry , the licensing agency shall send the applicant a written notice of whether the License for Establishment of the representative office is granted. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.