In the trend of globalization of the world economy, an enterprise does not want to limit their activities in a certain territory, but always seek for and jump into new overseas markets. When an enterprise establish a branch in a country, they has the obligation to comply with the local legal system. A foreign trader conducting commercial activities in Vietnam, the establishment of a branch must comply with conditions prescribed by the law and each foreign trader just can establish maximum 1 branch within 1 province or municipality. On January 25, 2016, the Government enacted Decree No. 07/2016/NĐ-CP (providing detailed regulations on establishment of representative offices or branches of foreign traders in Vietnam under the Law on Commerce). The Decree No. 07/2016/NĐ-CP replaced the Decree No. 72/2006/NĐ-CP which was enacted on July 25, 2006. The Decree No. 07/2016/NĐ-CP become effective from March 10, 2016.
To be granted the Establishment of Branch License, a foreign trader must satisfy the following conditions:
- The foreign trader was established or registered under the law of country or territory which is a member of any international agreement to which Vietnam is also a member or is recognized by the aforesaid country or territory;
- The foreign trader has been operated at least 05 years from the date of establishment or registration;
- In case the certificate of establishment or registration or any equivalent document of the foreign trader regulates the validity, then the certificate must be still valid for at least 01 more years from the date of submission;
- The scope of operation of the branch must comply with Vietnam’s WTO Commitments on market approach in treaties to which Vietnam is a member and conformable with business lines of the foreign trader;
- In case the scope of operation of the branch is inconsistent with Vietnam’s Commitments or the foreign trader is not located in country or territory which is a member of any treaty to which Vietnam is a member, the establishment of the branch must be accepted by the Minister of relevant Ministry.
Point 4 and 5 above are new conditions confirmable with treaties to which Vietnam is a member and were signed after the day the Law on Commerce 2005 was enacted. Aforesaid conditions ensure the establishment of the branch complying with general conditions of those treaties.
A dossier for establishment of branch of a foreign trader includes:
- An application form for the Establishment of Branch License (using the form published by the Ministry of Industry and Trade) signed by a competent representative of the foreign trader;
- Copies of the certificate of establishment or any equivalent document of the foreign trader;
- A letter of appointment of the head of the branch;
- Copies of audited financial statements or confirmations of fulfillment of tax duties or financial obligations of the latest fiscal year or any equivalent documents proving the existence and operation of the foreign trader in the latest fiscal year;
- Copies of the branch’s charter;
- Copies of ID card or passport of the head of the branch;
- Documents about the intended head-office location of the branch, including:
- Copies of memorandum of understanding or the lease agreement or documents proving that the trader has the rights to use the location;
- Copies of documents explaining the intended location of the branch: the location must comply with the regulations on security, occupational hygiene and safety and other relevant regulations;
- The branch do not have the right to lend or re-lease the location.
The foreign trader submit the dossier directly or by post to the Ministry of Trade and Industry. Within 03 working days from the day of submission, the registry body shall examine and require supplements if the dossier is invalid. The requirement shall be maximum 01 time during the dossier handling process.
Validity of the Establishment of Branch License:
The Establishment of Branch License shall be valid for 05 years but not exceeding the remaining validity of the certificate of registration or equivalent document of the foreign trader in case the documents aforesaid have expire date.
Conditions of the head of the branch:
- The head of the branch is responsible for his/her action and the operation of the branch to the foreign trader within the power of attorney;
- The head of the branch is responsible for his/her action surpassing the power of attorney;
- In the absence of the head of the branch, he/she must grant the power of attorney to another person. The power of attorney must be accepted by the foreign trader. The head of the branch is still responsible for exercising rights and obligations specified by the power of attorney;
- Upon the expiry of the power of the attorney mentioned in Clause 3 above, if the head of the branch has not return yet and no additional power of attorney is granted, the current authorized person shall be eligible for exercising rights and obligations within the scope of authorization until the head of the branch returns or a new head is appointed by the foreign trader;
- In case the head of the branch is absent in Vietnam for more than 30 days without authorizing another person or is dead, missing, detained, sentenced to prison or has no capacity for action, the foreign trader must appoint a new head of the branch;
- The head of the branch shall not concurrently hold the following titles:
- The head of another branch of the foreign trader;
- The head of the branch of another foreign trader;
- The legal representative of a business organization established under the law of Vietnam.
Competence to issue the Establishment of Branch License:
The foreign trader shall submit the dossier at the Ministry of Industry and Trade.
Publishing the branch’s information:
Within 15 days from the date of issue, re-issue, adjustment, renewal and revocation of the Establishment of Branch License, the state-authorized bodies has the responsibility to announce on their web portal the following information:
- Name and address of the branch;
- Name and address of the foreign trader;
- The head of the branch;
- The number, issue date and validity of the Establishment of Branch License;
- The scope off operation of the branch;
- The date of re-issue, adjustment, renewal and revocation of the Establishment of Branch License.
Any foreign trader or foreign enterprise planning to establish a branch in Vietnam to approach a new potential market here, please feel free to contact Viet An Law Firm. We are willing to give legal advice and provide relevant services to make sure that your investment process is safe, promptly and effective!