SETUP REP OFFICE IN VIETNAM

Update time 00:00:00, 13/06/2011 - 2386 views
A representative office (“RO”) is the simplest form of presence for a foreign company in Vietnam. It is intended to promote business opportunities for its head office and to supervise or speed up the performance of contracts that the head office has entered into with Vietnamese companies. A RO cannot, in precise terms, be regarded as an investment in Vietnam since such an office cannot conduct any revenue-generating activities. A foreign company can open more than one representative office in Vietnam. The establishment and operation of representative offices of credit institutions, education establishments and insurance companies are subject to different regulations and are not addressed in this section.
1.     Establishment Conditions

A foreign company that wants to set up a representative office in Vietnam must, in general, satisfy the following requirements:

    it must have obtained a certificate of incorporation in the relevant foreign country where its head office is situated;

    the RO’s parent company must have been in operation for at least one year prior to application for a RO licence; and

    its proposed operating activities in Vietnam must not be prohibited by the laws of Vietnam.

2.     Application Procedure

To establish a representative office in Vietnam, foreign companies are required to file the following documents with the relevant licensing authority:

    an application in a standard form (the application must be made in Vietnamese language or in both Vietnamese and another widely used language); and

    a notarised copy of the company's certificate of incorporation (a Vietnamese translation of this document must also be notarised by the Vietnamese Notary Office or certified by the Vietnamese embassy in the relevant foreign country);

    legalised copy of the parent company’s audited financial report for the previous financial year (or evidence proving the actual existence and operation of the parent company for the latest financial year); and

    the company’s charter.

The licensing authority may require a power of attorney or other documents to verify that the signatory to the application is fully authorised to sign the application, though this is not required by law.

It should also be noted that the licensing authorities have broad discretion to reject applications, including when documents are not “properly” prepared, where “supplementary” documents are not provided, and in “other circumstances in accordance with law”.

The implementing regulations foreshadow that the licensing authorities may make electronic forms available for online applications, which would be a welcome development.

3.     Press Announcement

Within 45 days of the issuance date of the licence, ROs are required to publish details of the RO such as name, name of its parent company, office location, chief representative, etc for three consecutive days in a printed or electronic newspaper.

4.     Licensing Authority

The Department of Trade or Department of Trade and Tourism is responsible for issuing licences for ROs.

5.     Time Limit for Licensing and Licensing Fee


Within 15 days of the date of receipt of all documents, a licence for the establishment of a representative office is issued by the relevant licensing agency. In the event that the application is not made in compliance with the law, the relevant licensing authority will give a written notice to the applicant within 3 working days of the date of receipt of the application.

The licensing fee for establishment of a representative office is currently VND1,000,000 (equivalent to US$60).

6.     Operation


The operating duration of a representative office in Vietnam is five years, which is extendable.

Within 45 days of the issue of the representative office's licence, the representative office must register its operation by way of a written notice to the relevant licensing authority indicating its office address, number of Vietnamese staff and foreign staff working at the representative office and its chief representative, and obtain an acknowledgement from the relevant licensing authority.

For the purpose of the above registration, the relevant licensing authority may require a copy of the lease agreement for the representative office in Vietnam. Following the registration and on the basis of a letter of introduction issued by the provincial Department of Trade, the representative office will register its seal with the provincial Police Department.

During the term of the representative office licence, any change to (i) the name or nationality of the foreign company or the name of the representative office, (ii) the number of staff, (iii) the content of the representative office's activities, or (iv) the representative office's address, must be reported to the relevant licensing authority.

7.     Permitted Activities


A representative office is permitted to carry out the activities specified in its licence. Such permitted activities include non-revenue generating activities such as market research, customer support, marketing or feasibility studies for investment projects.

Foreign companies are not permitted to use representative offices as a vehicle to carry on actual business in Vietnam. For example, a representative office cannot be used to conclude or execute commercial contracts. However, the chief representative of a representative office may be authorised by the parent company to negotiate and to sign contracts on its behalf, under a power of attorney on a case-by-case basis, provided that such contracts may only be performed by the parent company itself.

A representative office may (i) lease an office and residential accommodation and other facilities necessary for its activities (but no sublease is permitted), (ii) import equipment and facilities necessary for its operation and (iii) employ Vietnamese and expatriates. It may also open a bank account in foreign and Vietnamese currency at a bank in Vietnam, but any conversion or remittance of currencies must comply with the foreign exchange laws of Vietnam. The purpose of this account is to pay for the expenses of a representative office and should not be used for the receipt of payments from other companies.

8.     Reporting


Representative offices are required to file an annual report regarding the operation of the representative office in the previous year with the relevant licensing authority before the last working day of January in the following year. If necessary, and upon the written request of the competent authority, the representative office is obliged to make a report and/or supply information and documents relating to its operation.

9.     Termination


The operations of a representative office may be terminated in the following circumstances:

    where the parent company so requests;

    where the parent company terminates its operations;

    where the authorised State body makes a decision to withdraw or revoke the licence in accordance with the law of Vietnam;

    where the RO changes its location to a different province;

    where the RO changes its name;

    where the parent company changes the country of incorporation; and

    where the parent company changes the details of its operations.

In case of termination of operations under items (a) and (b) above, the parent company must forward a notice of termination of operation of the representative office to the relevant licensing authority at least thirty (30) days prior to the date of termination of operation of the representative office and shall return the licence to the relevant licensing authority. In cases (d) to (g) above, the RO may apply for termination and re-issuance of the licence in accordance with the changed circumstances.
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