Vietnam Representative Office Registration - The Business in Vietnam

Vietnam Representative Office Registration

22-06-2018 84 Comments 866 Views

A foreign company that is interested in exploring potential opportunities in Vietnam and the region, may setup a representative office before committing any large scale investments. Unlike a subsidiary or a branch office, a Vietnam representative office is viewed only as a laision office and as such has no legal status.

It cannot conduct any business activities of profit yielding nature. Finance and related industries are not liberalized sector and consequently the approval process for representative office of such organizations can be quite elaborate. For most other sectors, representative office approval process is a fairly straightforward process assuming the foreign company is an established entity and the scope of planned activities falls within the scope of a representative office.

The purpose of this guide is to provide details of setting up a representative office in Vietnam. To learn about various registration options available to foreign companies.

Representative Office Registration

Representative Office Registration

Vietnam Representative Office as a Type of Business Entity.

A Vietnam representative office has no legal status and it is merely an extension of the foreign company. It must not conduct any business activities of profit yielding nature. Since it lacks a legal status, a representative office is prohibited from concluding contracts, negotiating or opening Letter of Credit, getting involved in trading, leasing a warehouse. It can only engage in activities such as conducting market research and feasibility studies.

In a nutshell, a representative office is purely a temporary administrative office that is setup to manage and coordinate non commercial activities of a foreign company.

Key Facts about Vietnam Representative Office.

1.A representative office can engage in the following type of market research or feasibility studies:

  • Gather information about markets and clients.
  • Carry out research to ascertain information regarding product demand, price expectation and end user requirements.
  • Collect information regarding the procedure of setting up a permanent business entity in Vietnam.
  • Build trade contacts and handle product inquiries.
  • Participate in trade shows and exhibitions.

2.Representative office is not a separate entity from that of the parent company and the parent company is implicitly responsible for all liabilities of the representative office.

3.The foreign parent company that wishes to set up a representative office in Vietnam must fulfill the following criteria:

  • The foreign parent company must have a sales turnover in excess of US$250,000.
  • The foreign parent company must have been established for three years or more.
  • The representative office of the foreign parent company must adhere to the maximum headcount of five employees as stipulated by the authorities.

4.Name of the Vietnam representative office shall be the same as that of the parent company. In case where the name coincides with an already existing local company, authorities will make a decision on case by case basis.

5.Representative office is of a temporary nature and must essentially graduate into a subsidiary company or a branch office if the parent company wants to continue its operations in Vietnam after three years. The representative office must be renewed annually during the initial three-year period.

6.A representative office may engage a small number of local employees as support staff but must appoint a chief representative staff member from the head office who will relocate to Vietnam and oversee its activities. Since a representative office cannot be involved in commercial activities, the staff strength should be reasonable and kept to the essential minimum. The authorities have stipulated that a representative office can hire only up-to a maximum of five employees.

7.Any changes to the representative office - such as change in representatives, change in address, registered activities - must be notified to authorities in advance i.e. at least one month prior to the change taking effect. In case of changes in the name of the parent company, notification must be accompanied by a copy of the parent company’s Certificate of Change in name.

8.A representative office must clearly state that it is a representative office registered in Vietnam on its name plaque, name cards of its staff and other communication materials.

9.Information regarding the parent company’s activities and contact details of the representative office in Vietnam can be made public at the discretion of authorities.

10Representative office in Vietnam is not an incorporated body and therefore, none of the filing requirements imposed on the incorporated entities or registered corporate bodies are applicable to it. A representative office need not maintain any statutory documents or submit tax returns in Vietnam.

11.A Vietnam representative office is allowed to obtain a central registration number to import and export sample products and materials from the parent company. However, a representative office is strictly prohibited from involving in trading activities using the central registration number.

12.In case the parent company becomes dormant, the representative office must be de-registered.

13.A dormant representative office or an RO that fails to comply the terms and conditions that are stipulated by the authorities will be de-registered.

14.A representative office in Vietnam is not allowed to conduct the following activities:

  • Engaging in trade i.e. import or export.
  • Leasing warehouses.
  • Leasing its office premises to third parties.
  • Entering into or negotiating business contracts, issuing invoices, receiving letters of credit on behalf of its foreign parent company.
  • Sourcing or identifying suppliers or sources of raw materials or industrial parts.
  • Offering consultancy services or systems implementation.
  • Engaging in promotional activities such as advertising or marketing.
  • Coordinating activities between the foreign parent company and the clients.
  • Liasoning with or managing regional distributors or agents as well as related subsidiaries or brances.
  • Conducting quality control checks or carrying out supervisory activities.

Procedure and Documents Required for Representative Office Registration.

In order to register a Vietnam representative office, all new applications of the foreign commercial entity must satisfy the following criteria:

  • The foreign parent company must have a sales turnover in excess of US$250,000.
  • The foreign parent company must have been established for three years or more.
  • The proposed number of employees for the Vietnam representative office must be five or below.

The following documents are required when registering a representative office in Vietnam:

  • Completed application.
  • Copy of the parent Company’s Certificate of Incorporation or Registration Certificate, as the case may be.
  • Copy of the parent company’s latest annual report and audited accounts.
  • Duly endorsed undertaking to abide by the Terms and Conditions governing the representative offices in Vietnam.

All documents must be in English otherwise an official English translation of the documents must be submitted. If your intended activities are within the scope of allowed activities and the authorities are satisfied with the documents submitted, there should not be any problem with getting your application approved. In certain cases, authorities may ask for additional information to get further clarifications regarding your application.

Normally, the foreign company that is interested in setting up a representative office in Vietnam will engage a professional service firm in Vietnam for assistance. A professional firm will:

  • Assist with completing the application as per guidelines and requirements of the approving authorities.
  • File the necessary registration paperwork with authorities.
  • Act as a contact point if any clarifications are needed by authorities.
  • Upon approval of the representative office registration, file employment pass application for the staff member (from the head office) who will be relocating to Vietnam.

Approval and Renewal Information for Vietnam Representative Office.

Once approved, registration of a Vietnam representative office is valid for a period of 1 year after which it must be renewed. The authorities will issue a Letter of Approval confirming the registration of the representative office.

Normally, two months before the expiry, authorities will send a renewal notice. The representative office must be renewed seven days before the expiry date. Since a representative office is a temporary arrangement, it can only be renewed for a maximum of three years. The parent company is advised to upgrade the representative office to a subsidiary or a branch office after such period.

In case of no response, a reminder notice will be sent on the expiry date. If there is still no response, a final reminder is sent to the Head Office, one month after the expiry providing 14 days for the head Office to act, failing which authorities will initiate the deregistering process for the Vietnam representative office.

Bank Account Opening.

Upon successful registration, a Vietnam representative office can open a bank account in any of the several international and local banks in Vietnam. The account opening procedure can vary across banks. The timeline for opening a bank account, upon submitting all the required documents, can vary between 2-10 working days.

Typical documents required by banks include:

  • Completed and Signed Account Opening Application Form.
  • Photocopy of Letter of Approval from International Enterprise Vietnam.
  • Board of Director’s Resolution sanctioning the opening of the account and the signatories to the account.
  • Photocopy of Certificate of Incorporation of Parent Company.
  • Photocopy of Memorandum & Articles of Association of Parent Company.
  • Photocopy of Register of Directors.
  • Proof of Beneficial Ownership such as photocopy of Register of Shareholders or Certificate of Incumbency or Declaration of Beneficial Ownership along with IC/passport of the Beneficial owner.
  • IC/Passport copy of directors, authorized signatories and chief representatives.

In Summary.

A Vietnam representative office is a unique type of entity that does not have a legal status and does not generate any revenue but acts as a cost center to the parent company. A representative office is the best choice for corporations with business activities in Vietnam or around the region that need to be effectively administered or coordinated before settling on full fledged operations.

Tin Liên Quan