Foreign enterprises have the right to register one or more Branches in Vietnam. As a dependent unit, the Branch is allowed to carry out commercial activities, aiming to expand the market and bring more profits to foreign enterprises. In this article, TTVN Legal provide you the brief information about the sequence and procedures for Branch establishment in Vietnam.
1. The right to register the Branch and the scope of responsibilities of foreign traders in Vietnam
Foreign traders are allowed to register the Branch in Vietnam based on international treaties that Vietnam commits when it is a member. In addition, foreign traders are obliged to take responsibility before Vietnamese law for all activities related to their Branches in Vietnam. The above rights and obligations regulated in Articles 3 and 4 of Decree No. 07/2016/ND-CP as a foundation for investors to know when accessing the Vietnamese market.
Note: Within the administrative boundaries of a province or a central city, a foreign trader may not establish more than one Branch with the same name.
2. Conditions for granting a Branch establishment license
Conditions for granting a license to register the Branch in Vietnam are regulated by law in Article 8 of Decree No. 07/2016/ND-CP, whereby foreign traders must satisfy the following conditions:
- Foreign traders 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 signatory or recognized by the laws of these countries and territories;
- Foreign traders have operated for at least 05 years from the date of establishment or registration;
- In case the enterprise registration certificate or paper of equivalent validity of the foreign trader has a term of operation, such time limit must be at least 01 year from the date of application submission;
- The Branch’s operation contents must be consistent with Vietnam’s commitments to open the market in international treaties to which Vietnam is a signatory and the business lines of foreign traders.
Note: In case the scope of operation of the Branch is inconsistent with Vietnam’s commitments or the foreign trader does not belong a country or territory participating in an international treaty to which Vietnam is a signatory, the Branch establishment must be approved by the Minister of specialized management.
Foreign traders will not be granted a Branch establishment license when falling into one of the cases specified in Article 14 of Decree No. 07/2016/ND-CP, including:
- Fail to satisfy one of the conditions for granting a Branch establishment license;
- Foreign traders are within 02 years from the date their Branch establishment license in Vietnam being revoked when violating Article 44 of Decree No. 07/2016/ND-CP;
- Be subject to restrictions by law for reasons of national defense, security, social order and safety, social ethics and public health;
- Other cases as prescribed by law.
3. Term of Branch establishment license
A foreign trader’s Branch establishment license granted in Vietnam is valid for 5 years. However, this time limit needs to satisfy the condition that it does not “exceed the remaining time limit recorded in the Enterprise Registration Certificate”. It means, when a foreign trader’s Enterprise Registration Certificate has a term of less than 5 years (from the date the trader is allowed to register the Branch), the Branch establishment license will have a corresponding term and not exceed the term of the Enterprise Registration Certificate.
4. Sequence and procedures for granting a Branch establishment license
Step 1: Foreign traders prepare their own documents as required and submit in person, by post or online to the licensing agency.
Step 2: Within 03 working days from the date of receipt of the application, the licensing agency shall check and request additional information if the application is incomplete or invalid.
Note: This request for additional records can only be made up to once during the processing of the application.
Step 3: Within 07 working days from the date of receipt of complete and valid dossiers, the licensing agency shall grant or not the Branch establishment license to the foreign trader. In case of refusal, there must be a written explanation clearly stating the reason.
Note: The licensing agency shall send a written request to the Ministry of specialized management within 03 working days from the date of receipt of a complete and valid dossier if the establishment of a Branch falls into one of the following cases:
- The scope of operation of Branch is inconsistent with the Vietnam’s commitments or the foreign trader does not belong to a country or a territory participating in international treaties to which Vietnam is a signatory;
- The Branch establishment has not been regulated in specialized legal documents.
Within 05 working days from the date of receipt of the request from the licensing agency, the Ministry of specialized management shall issue a written statement clearly stating its approval or disapproval to grant the Branch establishment license. Within 05 working days from the date of receipt of the statement from the Ministry of specialized management, the licensing agency shall grant or not the Branch establishment license to the foreign trader. In case of refusal, a written reason must be clearly stated.
5. Dossier of application for a Branch establishment license
To register the Branch, a foreign trader needs to prepare 01 set of documents, referral list as following:
- An application form for a Branch establishment license;
- A copy of the Enterprise Registration Certificate or equivalent document of the foreign trader (consularly certified/ legalized and translated into Vietnamese and authenticated in accordance with Vietnamese law);
- The document of the foreign trader appointing the head of the Branch (translated into Vietnamese and authenticated in accordance with Vietnamese law);
- A copy of the audited financial statement or a written certification of the fulfillment of tax or financial obligations in the latest fiscal year or a paper of equivalent value issued by a competent agency or organization where the foreign trader is established, or certifying and proving the existence and operation of the foreign trader in the latest fiscal year (translated into Vietnamese and authenticated in accordance with Vietnamese law);
- A copy of the Branch’s Charter;
- Copy of passport or identity card or citizen identification card (if Vietnamese) or passport copy (if foreigner) of the head of the Branch (translated into Vietnamese and authenticated in accordance with Vietnamese law);
- Documents on the proposed location of the Branch office including:
- A copy of the memorandum of understanding or leasing agreement or a copy of the document proving that the trader has the right to exploit and use the location to locate the Branch office;
- A copy of the document on the proposed location of the Branch office as prescribed in Article 28 of Decree No. 07/2016/ND-CP and relevant laws.
What can TTVN Legal support investors?
Based on the specific needs of investors when approaching the Vietnamese market, TTVN Legal will:
- Consulting on investors’ ability to satisfy necessary and sufficient conditions when register the Branch in Vietnam;
- Consulting procedures for requesting Branch establishment, Branch’s rights and obligations and necessary procedures after being licensed for establishment in Vietnam;
- Regular legal advice, warning of potential legal risks in the process of operation, support to make reports in accordance with the law of the Branch in Vietnam;
- Advising and introducing to investors potential partners related to the expected operation of the Vietnam Branch.
Our summary of the processes and methods to legally register the Branch in Vietnam to provide investors with an overview when wishing to register the Branch in specific locations. Along with the Branch establishment, investors need to learn about the Branch’s rights and obligations, tax obligations towards state agencies or the procedure to close a Branch. All these subjects will be updated by TTVN Legal in the next articles.
Contact us if you need further advice.
Note: This article is for informational purposes only and it is not legal advice. The content of the article represents its own TTVN Legal, it is subject to change without prior notice.