How Foreign Entity Could Set up Representative Office in Vietnam?

Set up Representative Office in Vietnam under Commercial Law

To set up Representative Office in Vietnam is a strategic move for foreign businesses aiming to explore the market and engage in specific commercial activities permitted by Vietnamese law.  

A foreign business entity or a foreign trader is allowed to set up Representative Office in Vietnam according to the Commercial Law.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam. Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Differences between a Representative Office and a company in Vietnam

To set up Representative Office is less complicated than to set up company in Vietnam. The Vietnam Department of Trade will be approving the establishment of Representative Office in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam.  

The time duration to set up Representative Office in Vietnam is shorter than to establish a company. There are fewer conditions to meet than conditions in setting up company in Vietnam.  

The main difference between a Representative Office and a company in Vietnam is that the Representative Office could not directly conduct profit making activities.

Rights of the Representative Office

-To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;

-To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;

-To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;

-To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

Obligation of the Representative Office

-Not to directly conduct profit making activities in Vietnam;
Not to enter into commercial contracts of the foreign business entity or to amend or supplement such contracts already signed except where the head of the Representative Office has a valid power of attorney from the foreign business entity;

-To pay taxes, fees and charges and to discharge other financial obligations in accordance with the law of Vietnam;

-To report on the operation of the Representative Office in accordance with the law of Vietnam

Conditions to set up Representative Office in Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Representative Office in Vietnam if this company has real demand to open the market in Vietnam and meet conditions as below:

-Being a business entity or trader recognized by the law of the country or the territory (hereinafter referred to collectively as the country) where it has been lawfully established or made its business registration;

-Having been operating for at least one year after its lawful establishment or business registration in its country.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

How Vietnam Lawyers Could Assist Foreign Company to Set up Representative Office in Vietnam

Here is how the lawyers in Vietnam could help foreign investors to set up representative office in Vietnam.

Legal Guidance and Compliance

Vietnamese lawyers play a pivotal role in providing legal guidance to foreign companies to set up Representative Office in Vietnam. They navigate the legal intricacies, ensuring adherence to the Commercial Law and other relevant regulations. Lawyers help foreign entities understand the permissible activities for a Representative Office, steering them away from potential legal pitfalls.

Application and Licensing Process

To set up Representative Office in Vietnam requires obtaining an establishment license. Vietnamese lawyers assist foreign companies throughout the application process, ensuring all required documents are accurately prepared and submitted to the Vietnam Department of Trade. Their expertise expedites the approval process, facilitating a quicker setup compared to establishing a company.

Coordination with Government Agencies

While the Vietnam Department of Trade oversees the approval of Representative Offices, Vietnamese lawyers facilitate communication between foreign companies and the relevant authorities. This coordination ensures a smooth process, with lawyers acting as intermediaries to address any queries or requirements from the government during the setup phase.

Seal and Licensing Requirements to Set up Representative Office in Vietnam

A Representative Office is required to have a seal bearing its name. Vietnamese lawyers guide foreign entities on the proper procedures for obtaining and using this seal, ensuring compliance with local regulations. They also assist in securing the necessary licenses, providing comprehensive support to foreign companies entering the Vietnamese market.

Comparative Simplicity to Establishing a Company

Vietnamese lawyers highlight the relative simplicity to set up Representative Office in Vietnam compared to establishing a company in Vietnam. By clarifying the distinctions between the approval processes handled by the Vietnam Department of Trade for Representative Offices and the Vietnam Ministry of Planning and Investment for companies, lawyers help foreign investors make informed decisions based on their business objectives.

Time Efficiency

One of the key advantages of establishing a Representative Office is the shorter duration compared to setting up a company. Vietnamese lawyers guide foreign entities through a streamlined process, ensuring that the necessary steps are efficiently completed. This time efficiency is crucial for businesses aiming to establish a swift presence in the Vietnamese market.

Profit Limitations and Compliance

Vietnamese lawyers educate foreign companies on the primary distinction between Representative Offices and companies – Representative Offices cannot directly engage in profit-making activities. Lawyers guide foreign entities in understanding the scope of permissible activities, ensuring strict compliance with Vietnamese regulations.

Vietnamese lawyers play a vital role in assisting foreign companies set up  Representative Office in Vietnam. Their legal expertise, guidance through the application process, coordination with government agencies, and emphasis on compliance contribute to a seamless and efficient setup. With the support of competent legal professionals, foreign entities can strategically position themselves in the Vietnamese market through Representative Offices, leveraging the advantages of a simplified process and legal clarity.

About ANT Lawyers, a Law Firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi,  and Danang, and will help customers in doing business in Vietnam.