Establishment of representative offices of foreign construction companies

Establishment of representative offices of foreign construction companies

Currently, there are many foreign construction companies looking to penetrate the Vietnamese market by opening a branch or representative office here. So what conditions are needed to establish a representative office of a foreign construction company in Vietnam? What is the process for opening a representative office in Vietnam? We invite you to learn more details in this article. 

Can foreign construction companies be allowed to establish representative offices in Vietnam?

According 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 Ii a member. However, this article also stipulates that a foreign trader is only allowed to establish a representative office within a province or centrally run city.

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

+ Regarding market access restrictions: (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 sponsorship in Vietnam; (ii) The foreign enterprises must be a legal entity of a WTO Member; (iii) After 03 years from joining, they are allowed to establish a branch in Vietnam.

+ There is no restriction on national treatment, however, the branch head must be a permanent resident in Vietnam.

According to (i) Resolution No. 71/2006/QH11; (ii) Commercial Law 2005; and (iii) Decree No. 07/2016/ND-CP, the Ministry of Industry and Trade announced 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 Vietnam Ministry of Construction.

Conditions for establishing representative offices of foreign construction companies

If a foreign construction company wants to establish a representative office in Vietnam, it must meet the conditions for establishing representative offices of foreign traders in Vietnam as prescribed in Article 7 of Decree No. 07/2016. /ND-CP, including:

– Foreign traders are established and registered for business under the laws of countries and territories participating in international treaties to which Vietnam is a member or recognized by the laws of these countries and territories;

– Foreign traders have been operating for at least 1 year 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 1 year from the date of submission of the application;

– The operational content of the Representative Office must be consistent with Vietnam’s commitments in international treaties to which Vietnam is a member;

– In case the operational content of the Representative Office is not consistent with Vietnam’s commitments or the foreign traders do not belong to a country or territory participating in an international treaty to which Vietnam is a member, the establishment of Representative offices must be approved by the Minister and Head of the ministerial-level agency managing specialized sectors (hereinafter referred to as the Minister of specialized management).

Order and 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 order and procedures specified in Article 11 of Decree 07/2016/ND-CP. Accordingly, includes the following steps:

Step 1: Submit application

Foreign traders submit applications directly or by post or online (if eligible) to the Department of Industry and Trade where the Representative Office is expected to be located. In particular, the application file for a License to establish a representative office of a foreign trader is specified in Article 10 of Decree No. 07/2016/ND-CP, including:

• Application for a License to establish a Representative Office according to the form of the Ministry of Industry and Trade signed by an authorized representative of the foreign trader;
• Copy of Business Registration Certificate or equivalent documents of foreign traders;
• Document of the foreign trader appointing the head of the representative office;
• A copy of the audited financial statement or a document confirming the fulfillment of tax or financial obligations in the most recent fiscal year or documents of equivalent value issued by a competent agency or organization where the trader is located; proving the existence and operation of the foreign trader in the most recent fiscal year;
• Copy of passport or identity card or citizen identification card (if Vietnamese) or copy of passport (if foreigner) of the head of the Representative Office;
• Documents on the expected location of the representative office include:
• A copy of the memorandum of understanding or location rental agreement or a copy of documents proving that the trader has the right to exploit and use the location to locate the representative office;
• Copy of documents on the expected location of the representative office as prescribed in Article 28 of Decree 07/2016/ND-CP and relevant legal regulations.

Note:

Documents (2), (3), (4), (5) (in case a copy of the passport of the head of a representative office is a foreigner) must be translated into Vietnamese and authenticated according to regulations of Vietnamese law.

Document (2) must be certified or consularly legalized by Vietnamese diplomatic missions and consulates abroad under Vietnamese law.

Step 2: Receive documents

Within 03 working days from the date of receiving the dossier, the Department of Industry and Trade shall check and request additional documents if the dossier is not complete and valid. Requesting additional documents can be made at most once during the document process.

Except for the cases specified in Clause 4, Article 11 of Decree 07/2016/ND-CP, within 07 working days from the date of receipt of complete and valid documents, the Department of Industry and Trade may or may not grant the License to establish the Representative office for foreign traders.

In case of refusal to grant a permit, there must be a written statement clearly stating the reason.

Step 3: Send documents to seek opinions from specialized management ministries (if any)

In the case specified in Clause 5, Article 7 of Decree 07/2016/ND-CP and in cases where the establishment of a Representative Office has not been stipulated in specialized legal documents, the Department of Industry and Trade shall send a written request for opinion of the Ministry of Construction within 03 working days from the date of receipt of complete and valid documents.

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

Within 05 working days from the date of receiving the written request for opinions from the Department of Industry and Trade, the Ministry of Construction shall issue a document clearly stating its agreement or disagreement to grant a license to establish a Representative Office.

Step 5: Return results

Within 05 working days from the date of receiving comments from the specialized management ministry, the Department of Industry and Trade shall grant or not grant the License to establish representative offices for foreign traders. In case of refusal to grant a permit, there must be a document clearly stating the reason.

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