Establishment of representative office of foreign construction company

Establishment of representative office of foreign construction company

 

Currently, many foreign construction companies are looking to penetrate the Vietnamese market by opening a branch or representative office here. So what are the conditions to establish a representative office of a foreign construction company in Vietnam? What is the process of opening a representative office in Vietnam? Please join Siglaw to learn the details in this article:

Are foreign construction companies allowed to establish representative offices in Vietnam?

Pursuant to Article 3 of Decree No. 07/2016/ND-CP, foreign traders are allowed to establish representative offices of foreign traders in Vietnam according to Vietnam’s commitments in international treaties to which Vietnam is a member. However, this Article also stipulates that a foreign trader is only allowed to establish one representative office within the scope of one province or centrally-run city.

According to Section II.3 of the commitment WT/ACC/VNM/48/Add.2 dated October 27, 2006 between Vietnam and the WTO, Vietnam commits not to restrict the commercial presence in Vietnam of foreign suppliers providing construction services and related technical services when these suppliers meet the following conditions:

+ Regarding conditions for limiting market access: (i) Within 2 years from the date of accession, 100% foreign-owned enterprises are only allowed to provide services to foreign-invested enterprises and projects with foreign funding in Vietnam; (ii) Foreign enterprises must be legal entities of a WTO Member; (iii) After 03 years from the date of accession, they are allowed to establish branches in Vietnam.

+ Regarding conditions for limiting national treatment: No restrictions on national treatment, however, the branch manager must be a permanent resident in Vietnam.

 

Pursuant to (i) Resolution No. 71/2006/QH11; (ii) Law on Commerce 2005; and (iii) Decree No. 07/2016/ND-CP, the Ministry of Industry and Trade promulgates the content of Vietnam’s commitments on Representative Offices and Branches of foreign traders. In particular, construction service providers and related technical services are allowed to establish representative offices in Vietnam and are managed by the Ministry of Construction of Vietnam.

 

Conditions for establishing a representative office of a foreign construction company

Foreign construction companies wishing to establish a representative office in Vietnam must satisfy the conditions for establishing a representative office of a foreign trader in Vietnam as stipulated in Article 7 of Decree No. 07/2016/ND-CP, including:

– The foreign trader is established and registered for business in accordance with the laws of the country or territory participating in an international treaty to which Vietnam is a member or recognized by the laws of such countries or territories;

– The foreign trader has been operating for at least 01 year from the date of establishment or registration;

– In case the Business Registration Certificate or equivalent document of the foreign trader stipulates a term of operation, that term must be at least 01 year 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 activities of the Representative Office are inconsistent with Vietnam’s commitments or the foreign trader is not from a country or territory participating in an international treaty to which Vietnam is a member, the establishment of the Representative Office must be approved by the Minister or Head of the specialized ministerial-level agency (hereinafter referred to as the Minister of the specialized ministry).

 

Procedures for establishing a representative office of a foreign construction company in Vietnam

The establishment of a representative office of a foreign construction company in Vietnam is carried out according to the procedures prescribed in Article 11 of Decree 07/2016/ND-CP. Accordingly, it includes the following steps:

 

Step 1: Submitting documents

Foreign traders submit documents directly or by post or online (if applicable) to the Department of Industry and Trade where the representative office is expected to be located. In particular, the dossier for granting a license to establish a representative office of a foreign trader is prescribed in Article 10 of Decree 07/2016/ND-CP, including:

 

1. Application for a license to establish a representative office according to the form of the Ministry of Industry and Trade signed by the authorized representative of the foreign trader;
3. A copy of the Business Registration Certificate or equivalent document of the foreign trader;
4. Documents of the foreign trader appointing/designating the head of the Representative Office;
5. A copy of the audited financial report or a document confirming the implementation of tax or financial obligations in the most recent fiscal year or equivalent documents issued or certified by the competent authority or organization where the foreign trader is established, proving the existence and operation of the foreign trader in the most recent fiscal year;
6. A copy of the passport or identity card or citizen identification card (if Vietnamese) or a copy of the passport (if foreign) of the head of the Representative Office;
7. Documents on the proposed location of the Representative Office, including:

• A copy of the memorandum of understanding or agreement on leasing the location or a copy of the document proving that the trader has the right to exploit and use the location to establish the Representative Office;
• Copies of documents on the proposed location of the Representative Office as prescribed in Article 28 of Decree 07/2016/ND-CP and relevant legal provisions.

 

Note:

Documents (2), (3), (4), (5) (in case the passport copy of the head of the Representative Office is a foreigner) must be translated into Vietnamese and certified in accordance with Vietnamese law.

Document (2) must be certified or consularly legalized by a Vietnamese diplomatic mission or consular agency abroad in accordance with Vietnamese law.

 

Step 2: Receiving the dossier

Within 03 working days from the date of receipt of the dossier, the Department of Industry and Trade shall check and request additional documents if the dossier is incomplete or invalid. The request for additional documents shall be made a maximum of once during the entire dossier processing process.

Except for the case specified in Clause 4, Article 11 of Decree 07/2016/ND-CP, within 07 working days from the date of receiving a complete and valid dossier, the Department of Industry and Trade shall grant or not grant a License to establish a Representative Office to a foreign trader.

In case of refusal to grant a license, a written document stating the reasons must be provided.

 

Step 3: Send a document to request comments from the specialized management ministry (if any)

 

In the case specified in Clause 5, Article 7 of Decree 07/2016/ND-CP and in the case where the establishment of a Representative Office has not been regulated in a specialized legal document, the Department of Industry and Trade shall send a document to request comments from the Ministry of Construction within 03 working days from the date of receiving a complete and valid dossier.

 

Step 4: The specialized management ministry returns the result (if any)

Within 05 working days from the date of receiving the request for comments from the Department of Industry and Trade, the Ministry of Construction shall issue a document stating whether it agrees or disagrees with granting a license to establish a representative office.

 

Step 5: Return the result

Within 05 working days from the date of receiving the comments from the specialized management ministry, the Department of Industry and Trade shall issue or not issue a license to establish a representative office to a foreign trader. In case of not granting a license, there must be a document stating the reason.

 

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