INSTRUCTIONS ON CURRENT PROCEDURES FOR ESTABLISHING A COMPANY’S BRANCH

In the current trend of globalisation and dynamic competitive environment, the presence of traders in various localities and regions through the establishment of branches is a strategic move that not only allows enterprises to expand the scale of production and business but also opens up opportunities to access new markets, connect with new partners, attract new customers and create promising business prospects. However, in order to establish branches, enterprises should have thorough preparation and ensure strict compliance with legal regulations. Therefore, in the article below, we will provide instructions on the current procedures for establishing a company’s branch to help enterpries easily follow and implement.

1. Instructions on procedures for establishing a company’s branch of a Vietnamese company

A branch is a dependent unit of an enterprise and is responsible for performing all or part of the enterprise’s functions, including the function of authorised representation. The branch’s business lines must be consistent with the enterprise’s business lines. [1]

The company has the right to establish branches domestically and abroad, and have more than one branch in an administrative unit boundaries.[2] The establishment of a branch must be registered according to law and announced publicly.[3]

How to name a company’s branch

Name of branch must be written with letters in the Vietnamese alphabet, letters F, J, Z, W, numbers and symbols.[4] The phrases “company” or “enterprise” must not be used as part of the proper name of the company’s branch.[5] In addition, the branch’s name must include the name of enterprise followed by the phrase “Branch”.[6] For example: IDK Joint Stock Company – Hanoi Branch.

Apart from the Vietnamese name, company’s branch may register names in foreign languages ​​and abbreviated names. The foreign language name is a name translated from the Vietnamese name into one of the foreign languages ​​in the Latin script. The abbreviation is abbreviated from the Vietnamese name or foreign language name.[7] Example Vietnamese name: IDK Joint Stock Company – Hanoi Branch; English name: IDK Joint Stock Company – Hanoi Branch, abbreviation: IDKHN.

The branch’s name must be displayed at the branch, printed or written in smaller font size than the Vietnamese name of the enterprise on transaction papers, documents and publications issued by the branch.[8]

Dossier for registration of company’s branch operations

The dossier for registration of the branch operations includes the following documents:[9]

• A notification of establishment of branch signed by the legal representative of the enterprise according to the form in Appendix II-7 issued with Decree 01/2021/ND-CP;
• The copy of the resolutions or decision and the copy of the meeting minutes of the Board of Members for limited liability companies with two or more members and partnerships, and of the Board of Management for joint stock companies; the copy of the resolution or decision of the company owner for single-member limited liability companies on the establishment of the branch;
• Copies of personal legal documents for the head of the branch;
• Authorisation document to carry out branch operation registration procedures (in case there is an authorised person submitting the application on behalf of the enterprise).

Order and procedures for establishing a company’s branch

1.3.1. In case of direct registration or via postal service

Step 1: The enterprise submits 01 dossier for branch operation registration to the Business Registration Office of the province where the branch is located.[10]

Step 2: Within 03 working days from the date of receiving valid application, the Business Registration Office issues the Branch Operation Registration Certificate.

In case the dossier is not valid, the Business Registration Office will notify the enterprise in writing of the content that needs to be amended or supplemented.

The fee for issuing a new Branch Operation Registration Certificate is 50,000 VND/time.

1.3.2. In case of registration by online method

Currently, most provincial Business Registration Offices require enteprises to register their business online. The procedure is carried out according to the following steps:

Step 1: Enterprises access the National Enterprise Registration Portal https://dangkylanhdoanh.gov.vn, select Electronic Enterprise Registration and then choose one of two registration methods: use Public digital signature or use of Business Registration Account. Connecting public digital signatures and registering enterprises’ accounts can be carried out according to the Instructions for registering and using accounts on the National Enterprise Registration Portal of the Agency for Business Registration.

Step 2: Enterprises submit information declaration dossier, download electronic documents, and authenticate registration dossier via the electronic information network according to the process on the National Enterprise Registration Portal. After completing the submission of documents, enterprises will receive a Receipt of branch operation registration dossiers via the electronic information network.

Step 3: In case the dossier is valid, within 03 working days from the date of receiving the dossier, the Business Registration Office will issue the Branch Operation Registration Certificate and notify the enterprise of the issuance of the branch operation registration. In case the dossier does not meet the conditions, the Business Registration Office will send a notice via electronic information network to the enterprise to request amendments and supplements to the dossier.

Step 4: Enterprises can request to send the Branch Operation Registration Certificate through the public postal service.

Enterprises registering branch operations electronically are exempt from the registration fee[11] but will have to pay a fee for publishing the enteprise registration content on the National Business Registration Portal at a rate of 100,000 VND/time.

In case a Vietnamese enterprise establishes a branch abroad, it shall comply with the provisions of that country’s law. Within 30 days from the date of officially establishing a branch abroad, the enterprise must notify in writing the Business Registration Office where the headquaters of the enterprise is located. The notice must be accompanied by a copy of the Branch Operation Registration Certificate or equivalent document. The Business Registration Office updates information about the enterprise’s branch in the National Business Registration Database within 03 working days from the date of receipt of the notification.[12]

2. Instructions on procedures for establishing a company’s branch of foreign traders in Vietnam

Foreign traders (usually foreign enterprises legally established and operating under foreign laws) are allowed to establish branches in Vietnam according to Vietnam’s commitments in international treaties to which Vietnam is a member. A foreign enterprise may not establish more than one branch with the same name within a province or centrally-afilliated city.[13]

Conditions for establishing a branch of foreign enterprises in Vietnam

Foreign enterprises are allowed to establish branches in Vietnam when they meet the following conditions:[14]

• Foreign enterprises are established and registered for doing business in accordance with the laws of countries and territories participating in international treaties to which Vietnam is a member or recognised by the laws of these countries and territories;
• The foreign enterprise has been operating for at least 05 years from the date of establishment or registration;
• In case the Business Registration Certificate or equivalent document of the foreign enterprise stipulates an operating term, that term must be at least 01 year from the date of submission of the dossier;
• The operational content of the branch must be consistent with Vietnam’s market opening commitments in international treaties to which Vietnam is a member and in accordance with the business lines of foreign enterprises;
• In case the operational content of the branch is not consistent with Vietnam’s commitments or the foreign enterprise does not belong to a country or territory participating in an international treaty to which Vietnam is a member, the establishment of the branch must be approved by the specialised management Minister.

Application for a License for establishment of branch of foreign enterprises in Vietnam

A dossier includes:[15]

• An application for a license for establishment of branch according to form MD-5 Circular 11/2016/TT-BCT signed by an authorised representative of the foreign enterprise;
• Copy of Business Registration Certificate or documents of equivalent value of the foreign enterprise;
• Documents of the foreign enterprise appointing/appointing the head of the branch;
• Copy of the audited financial statements or documents confirming the implementation of tax or financial obligations in the most recent fiscal year or documents of equivalent value issued or certified by a competent authorities or organisations where the foreign enterprise is established, proving the existence and operation of the foreign enterprise in the most recent fiscal year;
• Copy of the Charter of operations of the branch;
• Copy of passport or identity card or citizen identification card (if Vietnamese) or copy of passport (if foreigner) of the head of the branch;
• Documents on the expected location of the branch headquarters include:

+ A copy of the memorandum of understanding or location rental agreement or a copy of documents proving that the enterprise has the right to exploit and use the location for its branch headquarters;

+ Copy of documents on the expected location of the branch headquarters.

Documents must be translated into Vietnamese and authenticated according to the law of Vietnam. The Business Registration Certificate must be certified or consularly legalised by overseas Vietnamese diplomatic missions or consulates in accordance with the law of Vietnam.

Procedures for granting a License for establishment of branch of foreign enterprises in Vietnam[16]

Step 1: Foreign enterprises submit dossier directly or by post or online (if eligible) to the Ministry of Industry and Trade.

Step 2: Within 03 working days from the date of receiving the dossier, the Ministry of Industry and Trade checks and requests additional documents if the dossier is not complete and valid. Requesting additional documents can be made at most once during the dossier processing process.

Step 3: Within 07 working days from the date of receipt of complete and valid documents, the Ministry of Industry and Trade shall issue or not issue a License for establishment of branch to the foreign enterprise. In case of refusal to issue the license, there must be a document clearly stating the reason.

Step 4: In case the operational content of the branch is not consistent with Vietnam’s commitments or the foreign enterprise does not belong to a country or territory participating in an international treaty to which Vietnam is a member and in case the establishment of branch that is not regulated in specialised legal documents, the Ministry of Industry and Trade shall send a document to seek opinions from the specialised management Ministry within 03 working days from the date of receipt of complete and valid dossier. Within 05 working days from the date of receipt of the document from the Ministry of Industry and Trade, the specialised management Ministry shall issue a document clearly stating its agreement or disagreement to grant a license for establishment of branch. Within 05 working days from the date of receipt of the document from the specialised management Ministry, the Ministry of Industry and Trade shall issue or not issue a License for establishment of branch to the foreign enterprise. In case of refusal to issue the license, there must be a document clearly stating the reason.

Understanding the procedures for establishing a company’s branch not only helps enterprises expand their business operations legally, but also optimises operating processes, minimising legal risks and costs. From preparing dossier, submitting dossier to receiving an operating license, each step requires meticulousness and understanding of current legal regulations. Hopefully the current article on Instructions on current procedures for establishing a company’s branch above will help businesses carry out the procedures for establishing a branch quickly and legally.

The above is an overview of  Instruction on current procedures for establishing a company’s branch. If you have difficulties in finding a Law Firm to advise and support in the relevant legal field, please contact us. Phuoc & Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also rated as one of the leading consulting firms specialising in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 44.1 Law on Enterprises 2020

[2] Article 45.1 Law on Enterprises 2020

[3] Article 84.4 Civil Code 2015

[4] Article 40.1 Law on Enterprises 2020

[5] Article 20.3 Decree 01/2021/ND-CP

[6] Article 40.2 Law on Enterprises 2020

[7] Article 20.2 Decree 01/2021/ND-CP

[8] Article 40.3 Law on Enterprises 2020

[9] Article 31.1 Decree 01/2021/ND-CP

[10] Article 31.1 Decree 01/2021/ND-CP

[11] Article 5.3 and List of fees, charges for business registration according to Circular 47/2019/TT-BTC

[12] Article 31.4 Decree 01/2021/ND-CP

[13] Article 3 Decree 07/2016/ND-CP

[14] Article 8 Decree 07/2016/ND-CP

[15] Article 12 Decree 07/2016/ND-CP

[16] Article 13 Decree 07/2016/ND-CP