In recent years, Vietnam has gradually become an attractive investment destination for foreign traders. Besides the options of establishing new enterprises or participating in business partnerships or capital contributions to companies, one of the most popular methods foreign traders use to enter the Vietnamese market is establishing branch offices. This article on the Conditions For Establishing Branches Of A Foreign Trader In 2024 will provide readers with the necessary conditions for setting up a foreign trader branch in Vietnam.
-
Conditions Regarding the Form of Branches in Vietnam
According to the Commercial Law 2005, a branch of a foreign trader in Vietnam is a dependent unit of the foreign trader, established and operating commercial activities in Vietnam in accordance with Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a signatory.
Accordingly, the term of the Establishment License for a foreign trader’s Branch in Vietnam is 5 years but does not exceed the remaining term of the foreign trader’s Enterprise Registration Certificate or equivalent document if such a document stipulates a term.
-
Conditions for Issuing an Establishment License for a foreign trader’s Branch in Vietnam
To be granted an Establishment License for a Branch in Vietnam, foreign traders must meet certain conditions specified in the Government’s Decree No. 07/2016/ND-CP. These conditions include:
2.1. Conditions for Establishment and Business Registration
To be granted an Establishment License for a foreign trader’s Branch in Vietnam, foreign traders must ensure that they are legally established and registered according to the laws of the countries and territories that participate in international treaties to which Vietnam is a member or are recognised by these countries and territories. Compliance with this regulation ensures the legality and transparency of the foreign trader’s company nationality, thereby ensuring safety in the branch’s business operations in Vietnam.
2.2. Minimum Operating Period
Foreign traders must have at least 5 years of business operations since the date of their legal establishment or business registration in the home country. This regulation aims to demonstrate the stability of the enterprise and ensure that the trader has sufficient experience and management capacity to operate the branch in Vietnam.
2.3. Validity of the Foreign Trader’s Enterprise Registration Certificate
If the Enterprise Registration Certificate or equivalent documents of the foreign trader stipulate an operating term, this term must be at least 1 year from the date of submitting the Branch establishment application in Vietnam. This regulation ensures that the foreign trader still meets the operating conditions according to the home country’s law, thereby ensuring that the Branch’s operations in Vietnam are not interrupted due to the foreign trader no longer meeting the operating conditions.
2.4. Scope of Activities of the Foreign Trader’s Branch in Vietnam
The scope of activities of the foreign trader’s Branch in Vietnam must comply with Vietnam’s market opening commitments in international treaties to which Vietnam is a member. Additionally, the Branch’s activities must be consistent with the foreign trader’s business lines. This ensures that the branch will operate within the registered business lines, avoiding instances where the branch operates in completely different activities compared to the company’s headquarters.
2.5. Approval from Competent Authorities
If the scope of activities of the Branch in Vietnam is not consistent with Vietnam’s commitments or if the foreign trader is not located in a country or territory participating in international treaties to which Vietnam is a member, the establishment of the Branch must be approved by the Minister of of ministerial agencies. This approval ensures that the branch’s business activities do not negatively impact the economy.
-
Certain Restrictions When Establishing a Foreign Branch in Vietnam
3.1. Legal Restrictions on Establishing Branches in Vietnam
Each foreign trader is not allowed to establish more than one Branch with the same name within a province or centrally- affiliated city. Additionally, in some cases, the licensing authority may refuse to grant a branch establishment license to a foreign trader for the following reasons:
- Failure to meet any of the conditions for issuing an Establishment License for a foreign trader’s Branch in Vietnam as stipulated in the Government’s Decree No. 07/2016/ND-CP.
- The foreign trader applies for a Branch Establishment License within 2 years from the date the previous Branch Establishment License was revoked in Vietnam for one of the reasons specified in Decree No. 07/2016/ND-CP.
- The establishment of Branches is restricted according to legal provisions for reasons of national defence, national security, social order and safety, social ethics, and community health.
- Other cases as stipulated by Vietnamese law.
3.2. Legal Restrictions on the Head of the Foreign Trader’s Branch in Vietnam
The Head of the foreign trader’s Branch is not allowed to concurrently hold the following positions:
- Head of a representative office of another foreign trader;
- Head of a representative office of the same foreign trader
- Legal representative of an economic organisation established under Vietnamese law.
Establishing a foreign trader’s branch in Vietnam requires strict compliance with legal regulations. Foreign traders need to ensure they meet the prescribed conditions before proceeding with the Branch establishment procedures in Vietnam. Understanding and adhering to these regulations will help foreign traders complete the Branch establishment registration process smoothly and efficiently, thereby facilitating effective Branch operations in Vietnam.
The above is an overview of Conditions For Establishing Branches Of A Foreign Trader In 2024 that Phuoc & Partners share with readers. If you have any difficulties related to the legal field, please contact us. Phuoc & Partners is a law firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Da Nang. Phuoc & Partners is also considered one of the law firms with a team of staff specialising in the leading legal field in Vietnam and whose practice areas are rated top in the legal market such as Labour and Employment, Taxation, Mergers and Acquisitions, Litigation. We are confident that we are one of the Law Firms providing the best legal services to our customers.
