International economic integration is the general development trend of the world. Can foreign traders set up offices or branches in Vietnam to make commercial activities easier? Join Lawyer X to find out through the following situation: “Howdy, Lawyer! Our company is planning to cooperate with a foreign company, and assist them in establishing a base in Vietnam. I want to ask if our country’s law allows foreign companies to set up representative offices or branches in Vietnam? If yes, what is the legal status of the representative office or branch of the foreign company in Vietnam? We look forward to the answer, thank you, lawyer! “
Legal grounds
Commercial Law 2005
What is a foreign trader?
Current commercial law recognizes and contains regulations governing commercial activities of foreign traders in Vietnam.
Under Clause 1, Article 6 of the 2005 Commercial Law, Traders are understood to include legally established economic organizations, individuals conducting commercial activities independently, regularly and with business registrations.
Foreign business entities specified in Clause 1, Article 16 of the 2005 Commercial Law are those that are established and registered for business in accordance with the provisions of foreign laws or recognized by foreign laws.
The right of foreign traders to set up representative offices and branches in Vietnam
Foreign traders generally have the right to set up a representative office or branch in Vietnam in accordance with Clause 2, Article 16 of the 2005 Commercial Law. However, it should be noted that what country the foreign traders are from? From there, considering international treaties and related bilateral agreements, then we can conclude the possibility of setting up representative offices and branches of such foreign traders in Vietnam.
Legal regulations also have definitions of representative offices and branches of foreign traders in Vietnam, according to which:
– Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.
– Vietnam-based branch of a foreign trader means a dependent unit of the foreign trader, which is established and conducts commercial activities in Vietnam under the provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.
Representative offices and branches of foreign traders in Vietnam have the rights and obligations in accordance with the law of Vietnam. Foreign traders are responsible before Vietnamese law for all operations of their representative offices and branches in Vietnam.
Legal status of representative offices and branches of foreign traders in Vietnam
The position of representative offices and branches of foreign traders in Vietnam is most clearly demonstrated through the legal provisions on rights and obligations of representative offices and branches in Vietnam, according to there:
Rights of representative offices of foreign traders in Vietnam
– To operate for the purposes, within the scope and duration stipulated in their establishment licenses.
– To rent offices, rent and purchase equipment and facilities necessary for their operations.
– To recruit Vietnamese and expatriate employees to work for them according to the provisions of Vietnamese law;
– To open accounts in foreign currencies or foreign currency-based Vietnam dong at banks licensed to operate in Vietnam, and to be allowed to use those accounts solely for their operations.
– To have seals bearing their names according to the provisions of Vietnamese law.
– To have other rights as defined by law
Obligations of Representative Office
– Not to directly conduct profit-generating activities in Vietnam.
– To conduct commercial promotion activities within the scope permitted by Commercial law.
– Not to enter into contracts, not to amend or supplement contracts already entered into by foreign traders, except where chief representatives obtain valid letters of authorization from foreign traders or other cases specified in Clauses 2, 3 and 4, Article 17 of Commercial law.
– To pay taxes, fees and charges, and fulfil other financial obligations provided for by Vietnamese law.
– To report on their operations according to Vietnamese law.
– To have other obligations as defined by Vietnamese law.
Rights of branches
– To rent offices, rent and purchase equipment and facilities necessary for their operations.
– To recruit Vietnamese and expatriate employees to work for them according to Vietnamese law.
– To enter into contracts in Vietnam in compliance with their operation contents specified in their establishment licenses and the provisions of Commercial law.
– To open Vietnam dong accounts and foreign-currency accounts at banks licensed to operate in Vietnam.
– To transfer profits overseas according to the provisions of Vietnamese law.
– To have seals bearing their own names according to the provisions of Vietnamese law.
– To conduct activities of goods purchase and sale and other commercial activities in compliance with their establishment licenses according to the provisions of Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.
– To have other rights provided for by law.
Obligations of branches
– To observe the accounting regime provided for by Vietnamese law; in cases where it is necessary to apply another commonly used accounting system, the approval by the Finance Ministry of the Socialist Republic of Vietnam is required.
– To report on their operations according to the provisions of Vietnamese law.
– To have other obligations provided for by law.
Competence to license foreign traders to conduct commercial activities in Vietnam
– The Government shall uniformly manage the licensing of commercial activities of foreign traders in Vietnam.
– The Planning and Investment Ministry shall be answerable to the Government for managing the issuance of licences to foreign traders investing in Vietnam according to the provisions of Vietnamese law.
– The Trade Ministry shall be answerable to the Government for managing the issuance of licences to set up Vietnam-based representative offices of foreign traders; or licenses to set up branches, joint-venture enterprises or enterprises with 100% foreign capital in Vietnam in cases where such traders are specialized in conducting activities of goods purchase and sale or other activities directly related to goods purchase and sale in compliance with Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.
– Where a specialized law contains specific provisions on the competence of ministries or ministerial-level agencies, which are responsible before the Government for managing the issuance of licences to foreign traders for conducting commercial activities in Vietnam, the provisions of such specialized law shall apply.
Frequently asked questions
Basically, representative offices of foreign traders are not allowed to enter into contracts, amend or supplement the signed contracts of foreign traders. However, there are exceptions in cases where the head of a representative office has a legal power of attorney from a foreign trader or the cases specified in Clauses 2, 3 and 4, Article 17 of the Commercial Law.
Yes! Branches of foreign traders can enter into contracts on their own in Vietnam in accordance with the operation contents specified in the branch establishment license.
Yes! Branches of foreign traders have the right to open Vietnam dong accounts and foreign-currency accounts at banks licensed to operate in Vietnam.
Conclusion: So the above is Can foreign traders set up representative offices or branches in Vietnam?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
