ESTABLISHING A REPRESENTATIVE OFFICE OF A FOREIGN COMPANY

In Vietnam, there are over 10,000 foreign company representative offices in Ho Chi Minh City, with similar numbers in other provinces and towns such as Binh Duong, Dong Nai, Hanoi, and others; some have been in operation since 1995. So, what are the requirements for establishing a foreign company’s representative office? The following article will explain.

WHAT IS REPRESENTATIVE OFFICE OF A FOREIGN COMPANY?

Representative offices of foreign companies in Vietnam are one of the most popular forms of FDI investment today and are established based on the provisions of Vietnamese law. Opening a representative office in Vietnam aims to allow foreign enterprises to research the market and engage in permitted trade promotion activities.

CONDITIONS FOR ESTABLISHING A REPRESENTATIVE OFFICE OF A FOREIGN COMPANY IN VIETNAM

Conditions for granting a representative office establishment license

A foreign company is granted a representative office establishment license when it meets the following requirements:

• Foreign enterprises that are established and registered for business in accordance with the laws of the countries or territories participating in international treaties to which Vietnam is a contracting party or recognized by the laws of these countries and territories;
• The foreign company has operated for at least 01 year from the date of establishment or registration;
• If the foreign company’s business registration certificate or equivalent document has a term of operation, such time limit must be at least 01 year from the date of application submission.
• The operation of the representative office must be consistent with Vietnam’s commitments in international treaties to which Vietnam is a signatory;
• In cases where the operation of a representative office is inconsistent with Vietnam’s commitments or the foreign enterprise is not a member of a country or territory participating in an international treaty to which Vietnam is a contracting party, the establishment of a representative office must be approved by the Minister or Head of the specialized management ministerial-level agency (hereinafter collectively referred to as the Minister of specialized management).

Conditions on the number of representative offices

A foreign enterprise may not establish more than one representative office with the same name within a province or municipal city.

Conditions for the head office of a representative office

• The head office’s location of a representative office must comply with the provisions of Vietnamese law on security, occupational safety and health conditions, and other conditions as prescribed by the law.
• Representative offices are not allowed to lend or sublease their headquarters.

Conditions on the name of a representative office

• The name of the Representative Office must be written with the letters of the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols;
• The name of the representative office must bear the name of the foreign company together with the phrase “representative office.”
• The name of the representative office must be written or attached at the representative’s head office. The name of the representative office is printed or written in smaller font size than the name of the foreign company on transaction papers, documents, and publications issued by the representative office.

Conditions for operation of representative offices

Representative offices perform the functions of a liaison office, including market research, promotion, and business investment opportunities for the representative company, excluding the service industry, where the establishment of a representative office in the field is specified in specialized legal documents.

Conditions on reporting regime of representative offices

Before January 30 of each year, the representative office is responsible for sending a report according to the form of the Ministry of Industry and Trade on its activities in the previous year by post to the licensing agency.

Representative offices are obliged to report, provide documents, or explain issues related to their operations at the request of competent state management agencies.

Conditions for the head of a representative office

The head of a representative office of a foreign company may not concurrently hold the following positions:

• Head of Branch of the same foreign trader;
• Heads of Branches of other foreign traders;
• The legal representative of such foreign trader or another foreign trader;
• The legal representative of an economic organization established in accordance with the laws of Vietnam.

WHAT CASES IS IT NOT ALLOWED TO BE GRANTED A LICENSE TO ESTABLISH A FOREIGN COMPANY’S REPRESENTATIVE OFFICE IN VIETNAM?

The licensing agency shall not grant a license to establish a representative office for a foreign company in the following cases:

• Failing to meet one of the conditions specified in Article 7 of Decree 07/2016/ND-CP;
• The foreign company applies for a license to establish a representative office within two years from the date of its revocation of the license to establish a representative office in Vietnam according to the provisions of Article 44 of Decree No. 07/2016/ ND-CP;
• The establishment of a representative office is restricted by law for reasons of national defense, security, social order and safety, social ethics and public health;
• Other cases as prescribed by law.

DOSSIER TO ESTABLISH A REPRESENTATIVE OFFICE OF A FOREIGN COMPANY IN VIETNAM

Dossier includes:

• An application form for a license to establish a representative office, made according to the form of the Ministry of Industry and Trade, signed by a competent representative of the foreign company;
• A copy of the foreign enterprise’s business registration certificate or equivalent document. This document must be certified or consular legalized by a diplomatic mission or consular office of Vietnam abroad in accordance with Vietnamese law;
• The document of the foreign enterprise appointing the head of the representative office;
• A copy of the audited financial statement, a written certification of the fulfillment of tax or financial obligations in the latest fiscal year, or an equivalent document issued by a competent agency or organization in the country where the foreign enterprise is located, grant or certify the existence and operation of foreign enterprises in the latest fiscal year;
• Copy of passport or citizen identification card (if Vietnamese) or passport copy (if foreigner) of the head of the representative office;
• Documents on the proposed location of the representative office’s headquarters include:
• A copy of the memorandum of understanding or agreement to rent the location or a copy of the document proving that the company has the right to exploit and use the location to locate the representative office;
• Copies of documents on the proposed location of the representative office’s head office as prescribed in Article 28 of this Decree and relevant laws;
• In case the passport copy of the head of the representative office is a foreigner, it must be translated into Vietnamese and notarized in accordance with Vietnamese law.

PROCEDURES FOR GRANTING A REPRESENTATIVE OFFICE ESTABLISHMENT LICENSE

Step 1: Prepare and submit your application

Prepare one set of documents to apply for a license to establish a representative office of a foreign company in Vietnam.

The parent company shall sign and stamp the entire application for a license to establish a representative office.

The foreign company submits the application file directly, by post, or online (if applicable) to the licensing agency where the representative office is expected to be located.

Step 2: Receive the application and issue the Establishment License

Within three working days from the date of receipt of the dossier, the licensing agency shall examine and request supplementation if it is incomplete or invalid. The request for additional records is made at most once during the processing of the application.

Within seven working days from the date of receipt of complete and valid dossiers, the licensing agency shall grant or not grant a license to establish a representative office for the foreign enterprise. In case of a refusal, a written explanation must clearly state the reason.

In case the operation of the representative office does not conform to the commitments of Vietnam or the foreign company is not a member of the country or territory participating in an international treaty to which Vietnam is a contracting party, and in case the setting up of a representative office not yet regulated in specialized legal documents:

• The licensing agency shall send a written request for opinions from the specialized management ministry within three working days from the date of receipt of a complete and valid application.
• Within five working days from the date of receipt of the written request for opinions from the licensing agency, the Ministries of specialized management shall issue a written document stating their agreement or disagreement with the establishment licensing of a representative office.
• Within five working days from the date of receipt of the opinion of the Ministry of specialized management, the licensing agency shall grant or not grant a license to establish a representative office for the foreign company. In case of refusal, a written reason must be clearly stated.

Step 3: Engrave a circular seal and register the seal sample of the Representative Office

The seal engraving procedure is carried out at the Administrative Management Department for social order and safety by the Police Department of the province/city where the representative office’s head office is located.

Engraving records include:

• A notarized copy of the representative office establishment license;
• A notarized copy of the ID/Passport of the head of the representative office;
• Power of attorney for Siglaw Law to carry out the procedure on behalf of the company. A power of attorney must be certified or consular legalized by a diplomatic mission or consular office of Vietnam abroad in accordance with Vietnamese law.

Completion time: five working days.

Step 4: Register for a tax identification number for the company’s representative office

Dossiers for granting tax identification numbers to representative offices must be submitted to the tax authorities within ten days from the date of issuance of the representative office establishment certificate.

An application for a tax identification number includes:

• Tax registration declaration;
• Notarized copy of representative office establishment license;
• Power of attorney for Siglaw Law to carry out the procedure on behalf of the company.

The time limit for a tax identification number is 05 – 07 working days from when the tax authority receives the complete and valid dossier.

Accordingly:

Departments of Industry and Trade of the provinces and centrally run cities where the enterprise intends to locate representative offices outside industrial parks, export processing zones, economic zones, and hi-tech zones shall carry out the issuance, re-issuance, amendment, extension, and revoke of the License to establish a representative office and terminate the operation of a representative office in case the establishment of a representative office has not been prescribed in specialized legal documents.

Management Boards of industrial parks, export processing zones, economic zones, and high-tech zones (hereinafter referred to as Management Boards) shall grant, re-grant, adjust, extend, and revoke Licenses for the establishment of representative offices and terminate the operations of representative offices located in industrial parks, export processing zones, economic zones, and high-tech zones if the establishment of representative offices has not been specified in the specialized legislation. 

CONSULTING SERVICES ESTABLISHING A REPRESENTATIVE OFFICE FOR A FOREIGN COMPANY PROVIDED BY SIGLAW

When using Siglaw’s consulting services to establish branches and representative offices of foreign companies, clients will receive the most enthusiastic support as follows:

• We are consulting on the best type of branch or representative office to meet customers’ needs.
• Guide to preparing documents and necessary information to compile dossiers for opening a branch or representative office.
• Answer and consult necessary legal regulations related to branches or representative offices.
• We advise on each type’s advantages, including legal and tax incentives.
• Instructions for preparing all relevant financial records.
• Guide customers to carry out procedures at competent agencies.
• Guidelines on capital regulations for branches or representative offices.
• Guide the tax reporting regime in accordance with the law.
• We advise on the necessary conditions and sub-licenses for the branch to operate its business per the law.

For a free comprehensive M&A consultation, please contact:

Siglaw Firm

Head office in Hanoi City: 12A Floor Sao Mai Building, No. 19 Le Van Luong Street, Nhan Chinh Ward, Thanh Xuan District, Hanoi City.

Email: vphn@siglaw.com.vn

Branch in the South: 21 N4 Street, Commercial, Service and Residential Complex at 16/9 Bui Van Ba Street, Tan Thuan Dong Ward, District 7, Ho Chi Minh City.

Central Branch: 177 Trung Nu Vuong Street, Hai Chau District, Danang City

Email: vphcm@siglaw.com.vn

Hotline: 0961 366 238