How Foreign Entity Could Set-up Representative Office in Vietnam?

A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam according to the Commercial Law No 36/2005 and Decree No. 72/2006/NĐ-CP dated July 25th, 2006 detailing the commercial law regarding Vietnam-based representative offices and branches of foreign traders.

Representative office of a foreign business entity in Vietnam

 (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam.  Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Setting up a Representative Office is less complicated from setting up a company in Vietnam.  The Vietnam Department of Trade will be approving the establishment of Representative Office in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam.  The time duration to establish a Representative Office is shorter than to establish a company.  There are fewer conditions to meet than conditions in setting up a company in Vietnam.  The main difference between a Representative Office and a company in Vietnam is that the Representative Office could not directly conduct profit making activities.

Rights of the Representative Office:

• To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;
• To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;
• To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;
• To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

Obligation of the Representative Office:

• Not to directly conduct profit making activities in Vietnam;
• Not to enter into commercial contracts of the foreign business entity or to amend or supplement such contracts already signed except where the head of the Representative Office has a valid power of attorney from the foreign business entity;
• To pay taxes, fees and charges and to discharge other financial obligations in accordance with the law of Vietnam;
• To report on the operation of the Representative Office in accordance with the law of Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Representative Office in Vietnam if this company has real demand to open the market in Vietnam and meet conditions as below:

• Being a business entity or trader recognized by the law of the country or the territory (hereinafter referred to collectively as the country) where it has been lawfully established or made its business registration;
• Having been operating for at least one year after its lawful establishment or business registration in its country.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

ANT Lawyers has law offices in Hanoi, Ho Chi Minh, and Da Nang City.  For advice or service request, please contact us via email ant@antlawyers.vn, or call +84 8 3520 2779.  To learn more about us, visit www.antlawyers.vn.

Source: ANTLawyers