Foreign rep offices and branches
Foreign rep offices and
branches in Vietnam
Legislation implementing the
2005 Commercial Law (effective as of 1 January 2006) has gradually been issued
over the last six months or so. The latest Decree 72-2006-ND-CP of the
Government dated 25 July 2006 updates Vietnam�s regulation of foreign
representative offices (RO) and branches in the commercial sector. Decree 72
sets out the conditions and procedures for the establishment of ROs and branches
as well as their rights and obligations; and the administrative responsibilities
of the licensing bodies (Ministry of Trade and local Departments of Trade).
With respect to ROs,
positive reforms under Decree 72 include:
� No longer a cap
of only 1 RO in any one province or city (as had been proposed in earlier
� No longer
compulsory to notify the licensing body of the number of staff or to seek a
license amendment when there is an increase in the number of expatriate staff
(as required under current regulations).
which will result in license withdrawal have been softened.
Negative reforms include:
conditions for a foreign business entity to establish a RO have been expanded in
comparison to current regulations from (just) having lawful business
registration in the foreign country to (also) having been in operation for at
least 1 year. Of note, this extra condition disqualifies foreign start-up
companies from testing Vietnam�s investment-business waters through a RO.
� Duration of RO
operation has been re-capped at 5 years (extendable).
With respect to branches,
positive reforms include:
� Narrow range of
permitted activities of branches under the current regulations has been
abolished. Under Decree 72, branch offices will be permitted to conduct trading
activities (ie import-export) and activities directly related to trading of any
goods. Of note, the right to conduct trading in particular goods and services
will only be available as scheduled in Vietnam�s international undertakings.
withdrawal: as for ROs above.
Negative aspects include:
conditions for a foreign business entity to establish a branch still include at
least 5 years in operation as well as having lawful business registration.
� The duration of
operation has been capped at 5 years (extendable). Currently, no cap applies.
ROs and branches of foreign
business entities which operate in �special� commercial sectors (banking,
finance, legal services, culture, education, tourism, etc) will be regulated by
other specific legal instruments. Of note, the current regulations also govern
tourism-related ROs and branches.
Existing ROs and branches
must register for re-issuance of their licenses in accordance with Decree 72.
The period for re-registration is six months from the date of effectiveness of
Decree 72 (expected to be end of August 2006). A six-month period is a
relatively short period for the many existing ROs and branches to become
informed of and comply with this re-registration requirement. Especially when
ministerial guidelines on procedures for re-registration are still in draft.
up-to-date with the latest legal developments in Vietnam and for access to
English translations of close to 3,000 Vietnamese business and investment laws,
go to www.vietnamlaws.com.