Establishment of branches

  In the current international integration process, businesses are tending to develop not only within the territory of a country or an area but also want to expand branches to many countries and reach out all over the world. When these enterprises want to open more branches to carry out business activities in different countries, they need to comply with the laws of the host country. For foreign traders conducting business activities in Vietnam, the establishment of a branch must satisfy all conditions as prescribed by law, and each foreign trader is only allowed to establish a maximum of 1 branch within a province or city directly under the Central Government. On January 25, 2016, the Government issued Decree 07/2016/ND-CP detailing the Commercial Law on representative offices and branches of foreign traders in Vietnam, replacing Decree No.72/2006/ND-CP dated July 25, 2006, of the Government detailing the Commercial Law on representative offices and branches of foreign traders in Vietnam. Decree 07/2016/ND-CP took effect from 10/03/2016.

Legal basis

• Law on investment 2020;
• Law on Enterprises 2020;
• Decree No.31/2021/ND-CP dated March 26, 2021, on the elaboration of some articles of the Law on Investment;
• Decree No.07/2016/ND-CP dated January 25, 2016, detailed regulations on the establishment of representative offices or branches of foreign traders in Vietnam under Laws on Commerce

Foreign businesses shall be granted Licenses for Establishment of branches if they satisfy the following requirements (Article 8 of Decree No.07/2016/ND-CP):

- The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;

- The foreign trader has come into operation for at least 05 years from the date of establishment or registration;

- The Certificate of Business registration or equivalent document is valid for at least 01 more years from the date of submission of the application;

- The scope of operation of the branch is conformable with Vietnam’s Commitments to market access stipulated in treaties to which Vietnam is a signatory shall be consistent with lines of business of the foreign trader;

- Where the businesses of the representative office are inconsistent with Vietnam’s Commitments or the foreign trader is not located in one of the countries or territories being parties to treaties to which Vietnam is a signatory, the representative office can be established only if they obtain the prior consent of the relevant Minister for the establishment of the representative office.

 Procedures for Licenses for Establishment of branches of foreign traders (Article 13 of Decree No.07/2016/ND-CP)

Step 1: The foreign trader shall submit their application to the licensing agency where the representative office is expected to be located directly or by post or online (where applicable).

Step 2: The licensing agency shall examine such application and request the applicant to complete their application within 03 working days from the date of receipt of the application (if the application is incomplete). The request for supplementation to the application shall be made only once during the processing of such an application.

Note: Apart from those specified in clause 4, Article 13 of Decree No.07/2016/ND-CP, the licensing agency shall send the applicant a written notification of whether the license or establishment of the branch is granted or not within 07 working days from the date of receipt of the valid application. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.

Step 3: For those specified in clause 5, Article 8 of Decree No.07/2016/ND-CP and the establishment of branches that has not been prescribed by specialized legislative documents, the licensing agency shall submit a written request for directions to the relevant Ministry within 03 working days from the date of receipt of the valid application. Within 03 working days from the date of receipt of the request for directions from the licensing agency, the relevant Ministry shall submit the licensing agency a written notification of whether or not they approve the application for the License for Establishment of the branch. Within 05 working days from the date of receipt of the notification from the relevant Ministry, the licensing agency shall send the applicant a written notice of whether the License for Establishment of the representative office is granted. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified

An application for the license for establishment of the branch of a foreign trader shall include :

- An application form for a license for establishment of the branch using the form promulgated by the Ministry of Industry and Trade and signed by a competent representative of the foreign trader.

- Copies of the Certificate of Business Registration or equivalent documents of the foreign trader;

- A letter of appointment of the head of the branch;

- Copies of audited financial statements or certificates of the fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established;

- Copies of the branch charter;

- Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the branch;

- Documents on the expected location of the branch including:

• Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the branch;
• Copies of documents on the expected location of the branch under Article 28 of Decree No.07/2016/ND-CP and provision of related laws.

Note: The Certificate of Business Registration or equivalent documents of the foreign trader, A letter of appointment of the head of the branch, audited financial statements or certificates of the fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents and the branch charter (for the head of the branch being foreigners) shall be translated into Vietnamese and certified true in accordance with laws of Vietnam. the Certificate of Business Registration or equivalent documents of the foreign trader shall be certified or legalized by overseas diplomatic missions or Consulates of Vietnam in accordance with the laws of Vietnam.

The above is the establishment of branches of Hnlaw & Partners Law Firm. If the business still has problems, unknown, or needs other legal assistance, please contact the online legal consulting department through the hotline: 0912.918.296 for answers. We hope to receive the cooperation of customers!

For more details, please contact Hnlaw & Partners Law Firm

Address: DBS Tower, No.N028, lot 31 Ha Tri commercial service, and housing area, Ha Tri ward, Ha Dong District, Ha Noi.

Email: tuvan.hnlaw@gmail.com

http://www.mpi.gov.vn/en/Pages/default.aspx

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