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ESTABLISHING A BRANCH OF A SOUTH KOREAN INVESTED COMPANY IN VIETNAM
In recent years, the relationship between Vietnam and South Korea has become increasingly close and developed. This positive outcome has led to many South Korean investors establishing projects in Vietnam, including shopping centers and Lotte cinemas, Shinhan Bank, Samsung, Hyundai, LG, etc. Therefore, the expansion of branches of South Korean companies in Vietnam is both evident and expected in the future. So, what are the methods, procedures, documentation, and important considerations when establishing a branch of a South Korean invested company in Vietnam? Let’s explore in the article below.
What is a Branch of a South Korean Invested Company in Vietnam?
A branch of a South Korean invested company in Vietnam is a dependent unit of a South Korean company in Vietnam (which may be 100% South Korean capital or have both Vietnamese and South Korean capital). The branch is established in accordance with Vietnamese law or international agreements of which Vietnam is a member, with the purpose of operating to generate profit.
Conditions for Establishing a Branch of a South Korean Invested Company in Vietnam
According to Article 8 of Decree 07/2016/ND-CP, for a South Korean company to establish a branch in Vietnam, they must comply with the following conditions:
- The South Korean company must be established and registered according to the laws of the country or territory participating in international agreements of which Vietnam is a member, or recognized by the laws of these countries or territories.
- The South Korean company must have been operating for at least 5 years from the date of establishment or registration.
- If the business registration certificate or equivalent is time-limited, it must still be valid for at least 1 year from the date of application submission.
- The activities of the branch must be compatible with Vietnam’s market opening commitments in international agreements of which Vietnam is a member and aligned with the business sectors of the South Korean invested company.
- If the activities are not compatible as required, approval must be obtained from the Minister of the relevant managing ministry.
Process and Procedures for Establishing a Branch of a South Korean Invested Company in Vietnam
Step 1: Prepare the application for establishing a branch of a South Korean invested company in Vietnam
- 1 application form for the license (signed by an authorized representative of the company) using Form MĐ-5 as per Circular 11/2016/TT-BCT.
- 1 certified copy of the Business Registration Certificate or equivalent.
- 1 document appointing the head of the branch of the South Korean company.
- 1 certified copy of the audited financial statement or 1 confirmation of tax or financial obligations for the most recent fiscal year, or 1 equivalent document.
- 1 certified copy of the operational charter of the South Korean company branch.
- Documents of the head of the branch: 1 certified copy of passport/ID card/Citizen ID (for Vietnamese individuals) or 1 copy of the passport (for foreigners).
- Documents regarding the proposed location of the branch:
- 1 certified copy of one of the following documents: memorandum of understanding, rental agreement, or documentation proving the trader’s right to exploit and use the location…
- 1 certified copy of the documentation regarding the branch’s location as per Article 28 of Decree 07/2016/ND-CP.
- And any relevant documents for each business sector.
NOTE: If the documents are from abroad, they must be translated into Vietnamese and certified according to Vietnamese law.
Step 2: Submit the application for establishing a branch of a South Korean invested company in Vietnam
- Method: In-person, online, or via postal service.
- Submission Address: Ministry of Industry and Trade (at 23 Ngo Quyen, Hoan Kiem, Hanoi), contact number (024) 73037898 (105).
- For branches involved in goods trading, a retail establishment license must be obtained from the Department of Industry and Trade.
- Processing Time:
- For sectors without conditional requirements, the processing time is 3 days from the date of receiving the application. If additional documentation is needed, the licensing authority will notify for supplementation. If the application is valid, the branch operation license will be issued within 7 working days from the date of receiving the application.
- For conditional sectors such as healthcare, education, insurance, tourism, transportation, etc., the processing time will be approximately 30-45 working days, as it will require consultations with relevant ministries or approval of operational eligibility.
Step 3: Create the company seal and carry out other post-establishment procedures such as tax registration.
Important Considerations When Establishing a Branch of a South Korean Invested Company in Vietnam
How long is the validity of the branch license for a South Korean invested company in Vietnam?
Article 9 of Decree 7/2016/ND-CP states that the license for establishing a branch of a South Korean company is valid for 5 years, but it cannot exceed the remaining validity period of the Business Registration Certificate (if the Business Registration Certificate specifies a duration).
Furthermore, if the branch license is reissued, the validity period of the reissued branch license will be the same as that of the previous license, in other words, also 5 years.
Regarding the head of the branch
The head of the branch of a South Korean company cannot concurrently hold the following positions:
- Head of the representative office of another foreign trader.
- Head of the representative office of the same foreign trader.
- Legal representative of an economic organization established according to Vietnamese law.
Branch name
Regulations regarding the branch name may be something that foreign investors overlook. Therefore, the South Korean company should note the requirements for the branch name according to Article 40 of the 2020 Enterprise Law:
- It must be written in Vietnamese, using the Vietnamese alphabet, excluding the letters F, J, Z, W, numbers, and symbols.
- The branch name = Company name + the word “Chi nhánh” (branch). For example: Chi nhánh Công ty cổ phần Hanguk.
- The branch name must be displayed or affixed at the branch’s headquarters.
- The branch and representative office names should be printed or written in a font size smaller than the Vietnamese company name on transaction documents, records, and publications issued by the branch or representative office.
Phone: (+84) 961 366 238
Email:
Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.
Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.
Central branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City
Facebook: https://www.facebook.com/hangluatSiglaw
