Establishment Of Representative Offices Of Foreign Companies
Currently, the Vietnamese market is attracting more and more foreign investors who want to invest. Normally, before investing, foreign investors will establish a representative office to survey the market, find potential customers, and build a system of suppliers and partners.
So what is a representative office? What are the procedures for establishing it? Are there any points to keep in mind when operating a representative office in Vietnam?
What is a representative office of a foreign company?
“Representative Office of Foreign Traders in Vietnam” is a dependent unit of foreign traders established in accordance with Vietnamese law to explore the market and carry out a number of promotional activities. commercial activities permitted by Vietnamese law.
Relevant Legal documents to the registration of establishment of representative offices:
- Commercial Law 2005.
- Decision 07/2016/ND-CP on the establishment, operation, rights, and obligations of representative offices and branches of foreign traders in Vietnam.
- Circular No. 11/2016/TT-BCT stipulates the form for implementing Decree No. 07/2016/ND-CP.
- Decision No. 99/2016/ND-CP on management and use of seals.
Representative offices of foreign traders in Vietnam have the following rights:
- Operate under the purpose, scope, and term stated in the establishment license.
- Rent headquarters and rent and buy necessary facilities and equipment.
- Recruit workers to work at Representative Offices.
- Open an account in foreign currency or Vietnamese Dong and use this account for representative office operations
- Make a seal bearing the name of the Representative Office.
Obligations of Representative Office:
- Do not conduct any directly profitable activities in Vietnam.
- Only carry out trade promotion activities within the scope permitted by this Law.
- Do not enter into contracts or amend or supplement contracts already signed by foreign traders unless the Head of the Representative Office has Legal authorization.
- Pay taxes, fees, and charges and perform other financial obligations according to regulations.
- Report on representative office activities according to regulations.
Conditions for granting a license to establish a representative office:
- Foreign traders are established and registered in accordance with the laws of countries and territories that participate in international treaties to which Vietnam is a member or is recognized by the laws of countries and territories.
- Foreign traders have been operating for at least 01 years from the date of establishment or registration;
- In case the Business Registration Certificate or equivalent document of a foreign trader stipulates an operating term, that term must be at least 01 years from the date of submission of the application;
- The activities of the Representative Office must be consistent with Vietnam’s commitments in international treaties to which Vietnam is a member;
- In case the Representative Office’s operational content is inconsistent with Vietnam’s commitments or the foreign trader does not belong to a country or territory participating in an international treaty to which Vietnam is a member, the establishment of a Representative Office must be approved. approval of the Minister and Head of ministerial-level agencies in specialized management.
Documents for a License to establish a Representative Office of a foreign investor in Vietnam:
- Application for issuance of License to establish representative office according to a form signed by an authorized representative of the foreign trader;
- Copy of Business Registration Certificate or documents of equivalent value of foreign investors (must be consular certified or consular Legalized according to regulations);
- Document appointing the Head of the representative office;
- A copy of audited financial accounts or papers verifying the fulfillment of tax or financial responsibilities in the most recent fiscal year or equivalent documents or documentation demonstrating the existence and operation of foreign investors in the most recent fiscal year;
- The ID card copy of the Head of the representative office;
- Documents about the anticipated location to place the representative office’s headquarters, such as (a copy of the memorandum of understanding or location rental agreement, the right to exploit and use the location to locate the representative office’s headquarters..)
- According to Legal requirements, foreign papers must be translated into Vietnamese and certified.
Process for granting License to establish Representative Office:
- Foreign investors submit applications directly by or post or online to the Licensing Authority, where the representative office is expected to be located.
- Within 03 working days from the date of receiving the dossier, the Licensing Authority will have finished checking and reviewing the validity of the application dossier and will respond with the results:
- Invalid profile: Request the additions (One time only)
- Valid application: Within 07 working days from the date of receiving the application, the Licensing Authority shall issue a License to establish a representative office for foreign investors.
- In case of refusal to grant a permit, there will be a written notice clearly explaining the reason.
Sometimes, the Licensing Authority must send a document to seek opinions from the Ministry of Specialized Management. Within 05 working days from the date of receiving comments from the Ministry of Specialized Management, the Licensing Authority shall issue or not issue a License to establish a representative office. If the license is not granted, a written notice will be sent to explain the reason clearly.
Operating a representative office has several limits because the representative office can only conduct representational tasks and cannot undertake various trading functions, such as:
- Prohibit engaging in direct profit-making activities in Vietnam.
- Contracts may not be entered into, amended, or supplemented.
- Representative offices are not permitted to promote or hire other merchants to undertake promotions in Vietnam for those represented.
- Representative offices are not permitted to engage in direct commercial advertising activities.
- Representative offices of merchants are not permitted to directly exhibit and introduce the goods and services of the traders they represent, except at the Representative Office’s headquarters.
- Traders’ representative offices are not permitted to arrange or participate in trade fairs and exhibits personally.
