According to the provisions of law; the head of a representative office of a foreign company in Vietnam is the office chief. However, many people do not know what rights and obligations this title brings to the head of representative offices. So, in this article; LSX legal firm will provide you information about the representative office and the chief of Representative Office of foreign company in Vietnam.
Legal grounds
- Law on Enterprise 2020
- Decree 07/2016/ND-CP
- Commercial Law 2005
Representative office of foreign traders in Vietnam
Clause 2, Article 44 of the Enterprise Law 2020 provides for representative offices of traders as follows:
“Article 44. Branches, representative offices, and business locations of an enterprise
2. A representative office of an enterprise is its dependent unit which acts as the enterprise’s authorized representative, represents and protects the enterprise’s interests. A representative office shall not do business.”
Accordingly, representative offices cannot conduct business, produce and supply the company’s goods and services to the market but can only perform the function as an authorization of the business.
In other words, a representative office means a place where businesses use to display samples, promote products and services, answer and advise customers, and meet the company’s partners…
Clause 6, Article 3 of the Commercial Law 2005 provides for representative offices of foreign traders in Vietnam as follows:
“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 a market survey and a number of commercial promotion activities permitted by Vietnamese law.”
Regulations on names of representative offices of foreign traders in Vietnam
Name of representative offices under the Law on Enterprise 2020:
- Firstly, the name of a representative office or business location shall consist of letters in the Vietnamese alphabet, the letters F, J, Z, W, numbers, and symbols.
- Secondly, the name of a representative office or business location shall consist of the enterprise’s name and the phrase “Chi nhánh”, “Văn phòng đại diện” or “Địa điểm kinh doanh” respectively.
- Thirdly, the name of a representative office or business location shall be displayed at the branch; representative office, or business location. The name of an enterprise’s branch or representative office is smaller than the Vietnamese name of the enterprise on the transaction documents, records; and printed materials issued by the branch or representative office.
Chief of Representative Office of foreign company in Vietnam
What rights and obligations does the head of a representative office of a foreign trader in Vietnam have? Article 33 of Decree 07/2016/ND-CP stipulates the head of the representative office of foreign traders in Vietnam as follows:
Article 33. Heads of representative offices or branches
- The Head of the representative office or branch shall be responsible for his/her action and the operation of the representative office or branch to his/her head office within the power of attorney.
- The head of the representative office or branch shall be responsible for his/her activities within the scope of authorization.
- In the absence of the head of the representative office or branch from Vietnam, he/she shall grant the power of attorney to another person. The power of attorney shall be made with the prior consent of the head office. However, the head of the representative office or branch shall be responsible for exercising rights and obligations specified in the power of attorney.
- Upon the expiry of the power of attorney stipulated in clause 3 hereof, if the head of the representative office or branch has yet to return and no additional power of attorney is made, the current authorized person shall be eligible for exercising rights and obligations as the head of the representative office or branch within the scope of authorization until the head of the representative office or branch returns or the head office appoints another person as the new head of representative offices or branch.
- If the head of representative offices or branch from Vietnam is absent from Vietnam for a period of longer than 30 days without any authorization, or if the head representative offices or branch is dead, missing, detained, sentenced to prison, or has no capacity for action, the head office shall appoint another person as the new head of representative offices or branch.
- If the head office authorizes the head of the representative office to sign, adjust or supplement contracts, the head office shall grant the power of attorney for each conclusion, adjustment, and supplementation.
The head of a representative office shall not concurrently hold the following titles:
- Firstly, the head of a branch of the same foreign traders;
- Secondly, the head of a branch of another foreign trader;
- Thirdly, the legal representative of the same foreign trader or others;
- Fourthly, the legal representative of a business organization incorporated following the Laws of Vietnam.
Conditions for establishing a representative office of a foreign company in Vietnam
Foreign traders may only granted a certificate to establish a representative office in Vietnam when fully meeting the following conditions:
- The foreign company established and registered for business in accordance with the laws of a country that is a party to an international treaty to which Vietnam is a member or recognized by the laws of these countries;
- The foreign company has operated in the host country for at least a year from the date of establishment or registration;
- In case the foreign business registration certificate stipulates the operation term; such certificate must have at least a year of validity from the date of filing in Vietnam;
- Activities of Representative Offices: market research, trade promotion in Vietnam.
- In case the operation content of the representative office is not consistent with the commitments of Vietnam or the foreign trader is not a member of a country or territory participating in an international treaty to which Vietnam is a contracting party, then the establishment of a representative office must be approved by the minister or head of a specialized management ministerial-level agency.
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Related articles
- Instruction to replace the legal representative online in Vietnam
- Who is the legal representative of the enterprise under Viet Nam Law on Enterprises?
- Can foreign traders set up representative offices or branches in Vietnam?
Related questions
1. Rights and interests of representative offices and branches shall be reserved during the operation in Vietnam under laws of Vietnam.
2. Representative offices and branches shall have the rights and obligations prescribed in the Law on Commerce and the license for establishment.
Foreign traders and their representative offices or branches offending provisions hereof shall be subject to penalties depending on the nature and severity of the violation under laws on action handling of administrative penalties .
To consider and decide to establish a branch or representative office of a company, businesses need to determine their actual needs. Each business operating in a different industry will have different needs. Even in the same industry, due to the management culture and operating methods, the expansion needs of each business differ.
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