Tiếng Việt
How are the rights and obligations of the Branch of foreign traders established in Vietnam regulated by law? That is one of the questions of foreign investors when they come to expand their business into Vietnam market. In this article, TTVN Legal will provide you with core information about the Branch’s legal rights and benefits, as well as the obligations that the Branch needs to perform when operating in Vietnam.
First of all, Vietnamese law recognizes the rights and obligations of the Branch established since the foreign trader completes procedure license Register the Branch in Vietnam according to international commitments to which Vietnam is a member. Rights and obligations of the Branch shall be implemented in accordance with the Commercial Law and in accordance with the contents of the Branch establishment license.
1. The rights of the Branch
The law allows the Branch to have basic rights for business activities as prescribed in Article 19 of the Commercial Law No. 36/2005/QH11 and Decree No. 07/2016/ND-CP including:
- Renting the office, renting and purchasing the necessary supplies for the Branch’s operations;
- Recruiting Vietnamese and foreigner workers to work at the Branch in accordance with Vietnamese law;
- Entering into a contract in Vietnam according the operation contents specified in the Branch establishment license and the Commercial Law No. 36/2005/QH11;
- Open an account in Vietnam dong or in a foreign currency at a bank licensed to operate in Vietnam;
- Remittance of profits abroad in accordance with Vietnamese law;
- Having a seal of the Branch in accordance with Vietnamese law;
- Carrying out goods purchase and sale activities and other commercial activities in accordance with the Branch establishment license suitable and the provisions of Vietnamese law and international treaties to which Vietnam is a contracting party.
Note: In case the Branch operates in the conditional industries and trades as prescribed by law, the Branch may only operate when all the conditions are satisfied.
2. The obligations of the Branch
The Branch is obliged to comply with the provisions of Commercial Law No. 36/2005/QH11 and Decree No. 07/2016/ND-CP as follows:
- Comply with the accounting regime in accordance with Vietnamese law;
- Annual report on the Branch’s operation in accordance with Vietnamese law;
- Report, provide documents or explain issues related to their operations at the request of competent state management agencies.
Note: In case it is necessary to apply another common accounting regime, it must be approved by the Ministry of Finance of the Socialist Republic of Vietnam.
3. The head of the Branch
The head of the Branch is appointed through a document by the foreign trader (according to the dossier of Register the Branch) to perform the rights and obligations of the Branch as prescribed by law. The head of the Branch recorded in the Branch establishment license needs to comply with the provisions of Article 33 of Decree No. 07/2016/ND-CP as follows:
(1) Scope of responsibility:
- The head of the Branch must be responsible to the foreign trader for his/her activities and that of the Branch to the extent authorized by the foreign trader;
- The head of the Branch must be responsible for his/her activities in case of performing activities outside the scope authorized by the foreign trader.
(2) Conditions of presence in Vietnam and when exit:
- The head of the Branch must authorize in documents for another person to perform the rights and obligations of the head of the Branch according to law when exiting Vietnam.
- In case the head of the Branch is not present in Vietnam for more than 30 days without authorizing another person to perform the rights and obligations of the head of the Branch or is dead, missing, detained, sentenced to prison, limiting or losing his/her civil capacity to act, the foreign trader must appoint another person to be the head of the Branch.
- In case the authorization period expires but the head of the Branch has not returned to Vietnam and has no other authorization, the authorized person has the right to continue to perform the rights and obligations of the head of the Branch within the authorized scope until the head of the Branch returns to work or until the foreign trader appoints another person to be the head of the Branch.
Note: This authorization must be approved by the foreign trader and the head of the Branch is still responsible for the performance of the authorized rights and obligations.
(3) Not concurrently hold the following positions:
- The head of Representative Office of another foreign trader;
- The head of Representative Office of the same foreign trader;
- The legal representative of an economic organization established in accordance with the laws of Vietnam.
Thus, when permitted to establish a Branch in Vietnam, foreign traders and the head of the Branch must comply with regulations on rights and obligations of the Branch. The foreign trader is responsible for all activities of the Branch in accordance with Vietnamese law and the head of the Branch is responsible to the foreign trader for all activities according to the authorized contents.
What can TTVN Legal support investors?
Based on the specific needs of investors when approaching the Vietnamese market, TTVN Legal will:
- Advise on investors’ ability to meet necessary and sufficient conditions before accessing the Vietnamese market;
- Legal advice to properly perform its rights and obligations of the Branch after being licensed for establishment in Vietnam;
- Regular legal advice, warning of potential legal risks in the process of operation, support in the implementation of reports in accordance with the law of the Branch in Vietnam;
- Advise and introduce investors to potential partners related to the Branch’s planned operation in Vietnam.
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.