When establishing a branch in Vietnam, foreign traders need to comply with certain procedures and conditions to obtain approval from licensing authorities and legally exist and operate. In particular, regulation related to head of foreign branch in Vietnam is one of the issues that need attention. So, how is this content specified?
1. Conditions for issuance of Licenses for establishment of foreign branch in Vietnam
Foreign traders will be issued a Licenses for establishment of foreign branch in Vietnam when they meet the following conditions:
– 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 come into operation for at least 05 year from the date of establishment or registration;
– The Certificate of Business registration or equivalent document is valid for at least 01 more year from the date of submission of the application;
– The scope of operation of the branch is conformable with Vietnam’s Commitments to market access stipulated in treaties to which Vietnam is a signatory shall be consistent with lines of business of the foreign trader;
– Where the businesses of the branch is inconsistent with Vietnam’s Commitments or the foreign trader is not located in one of countries or territories being parties to treaties to which Vietnam is a signatory, the branch can be established only if they obtain a prior consent of the relevant Minister for establishment of the branch.
2. Regulations on head of foreign branch
a. Legal liabilities of the Head of the Foreign Trader Branch
– The Head of the Branch must be responsible to the foreign trader for his or her activities and the Branch within the scope of authorization by the foreign trader.
– The head of a Branch must be responsible for his or her activities in case of carrying out activities outside the scope authorized by the foreign trader.
b. Issues of authorization to perform functions and tasks
– The head of foreign branch must authorize another person in writing to exercise the rights and obligations of the head of foreign branch according to the law when exiting Vietnam. Noted that, this authorization must be approved by the foreign trader. Contemporaneously, the head of foreign branch will still be responsible for the implementation of those authorized rights and obligations.
– In case the above authorization period expires but the head of foreign branch has not returned to Vietnam and there is no other authorization, the authorized person has the right to continue exercising the rights and obligations of the head of foreign branch within the authorized scope until the head of foreign branch returns to work at the branch or until the foreign trader appoints another person as the head of foreign branch.
– In case the head of foreign branch is not present in Vietnam for more than 30 days without authorizing another person to exercise the rights and obligations of the head of the branch or is dead, missing, or temporarily detained, sentenced to prison or restricted from losing civil act capacity, the foreign trader must appoint another person as the head of foreign branch.
c. Restrictions on the head of foreign branch
– The head of foreign branch must not concurrently hold the following positions:
+ Head of representative office of another foreign trader;
+ Head of representative office of the same foreign trader;
+ Legal representative of an economic organization established in accordance with Vietnamese law.
– The head of foreign branch performs the function of representing foreign traders in Vietnam under authorization and must comply with Vietnamese laws related to the regime of sub-authorization for people to perform the principal’s obligations of head of foreign branch.
>> PROCEDURES FOR ISSUANCE OF LICENSES FOR ESTABLISHMENT OF FOREIGN BRANCH IN VIETNAM https://linconlaw.vn/procedures-for-issuance-of-licenses-for-establishment-of-foreign-branch-in-vietnam/
>> DO NON-RESIDENT INDIVIDUAL HAVE TO PAY PERSONAL INCOME TAX? https://linconlaw.vn/do-non-resident-individual-have-to-pay-personal-income-tax/
3. Penalties for violations of regulations on head of foreign branch
Depending on the behavior and severity of the violation, the foreign trader branch may be subject to administrative sanctions according to the following regulations:
a. Fine from VND 30,000,000 to VND40,000,000 for one of the following acts:
– The head of a foreign trader branch concurrently holds the position of head of the representative office of the same foreign trader or of another foreign trader in Vietnam;
– The head of a foreign trader branch concurrently serves as the legal representative of an economic organization established in accordance with Vietnamese law.
b. Additional penalties:
Deprivation of the right to use the license to establish a branch from 01 month to 03 months.
- Commercial Law 2005;
- Decree 07/2016/ND-CP detailing the Commercial Law on Representative Offices and Branches of foreign traders in Vietnam promulgated on January 25, 2016;
- Decree 98/2020/ND-CP regulating penalties for administrative violations in commercial activities, production and trading of counterfeit and banned goods and protecting consumer rights promulgated on August 26, 2020.
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