In the course of international integration, businesses tend to not only stay within the territory of a country but also expand to more countries around the world, just like a tree growing its branches.
Under Vietnam’s Law on Enterprise, a branch is a unit dependent on the enterprise and obliged to perform part or all of the enterprise’s functions, including representation under authorization. Moreover, business lines of the branch must be consistent with those of the enterprise.
As a matter of fact, when enterprises wish to open more branches to carry out business activities in different countries they must abide by the laws of the host countries. For foreign traders conducting business activities in Vietnam, the establishment of branches must satisfy all the conditions prescribed by law and each foreign trader will not establish more than one branch that shares the same name within a province or centrally-affiliated city.
Foreign traders shall be granted licenses for the establishment of branches if they satisfy the following requirements:
- The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;
- The foreign trader has been in operation for at least 05 years from the date of establishment or registration;
- The Certificate of Business Registration or the equivalent document is valid for at least 01 years from the date of application submission;
- The scope of operation of the branch must conform to Vietnam’s Commitments to market access stipulated in treaties to which Vietnam is a signatory and must be consistent with lines of business of the foreign trader;
- Where the scope of operation of the branch is inconsistent with Vietnam’s Commitments or the foreign trader is not located in countries or territories being parties to treaties to which Vietnam is a signatory, a branch can be established only after obtaining approval from relevant Minister
The License for Establishment of a branch can be valid for 05 years but not exceeding the remaining effective period of the Certificate of Business Registration or the equivalent if documents state expiry date. The effective period of an extended License for Establishment of the branch shall be identical to that of the current license.
An application for the license for establishment of the branch of a foreign trader shall include:
- Application form for establishment license of signed by a competent representative of the foreign trader;
- Copies of the Certificate of Business Registration or equivalent documents of the foreign trader;
- A letter of appointment of the head of a branch;
- Copies of audited financial statements or certificates of the fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established;
- Copies of branch’s charter;
- Copies of passport or ID card (for Vietnamese) or copies of passport (for foreigners) of the head of a branch;
- Documents on the expected location of the branch including copies of the memorandum of understanding or leasing agreements or documents as proof of the right to use a location for the branch; copies of documents on security, occupational hygiene and safety of the location.
Be noted that documents specified in No. 2 – 5 should be translated into Vietnamese and certified in accordance with the law of Vietnam. Especially, copies of the Certificate of Business Registration or equivalent documents of the foreign trader shall be certified or legalized by overseas diplomatic missions or Consulates of Vietnam.
Procedure to apply for branch establishment license will commence when a foreign trader submits the application to licensing agency where the branch is expected to be located directly or by post or online (if applicable). The licensing agency will examine the application and may request the applicant to supplement if documents are not sufficient within 03 working days from the date of receipt of the application. The request for supplementation to the application can be made only once during application processing.
Usually, written notification will be sent to the applicant stating whether the licensing agency shall send the applicant a written notification of whether the license or establishment of the branch is granted or not within 07 working days from the date of receipt of the valid application. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.