New provisions on Representative Offices and Branches of Foreign Companies in Vietnam

10 - 03 - 2016

 

The Decree 72/2006/ND-CP detailing the Trade Law on representative offices, branches of foreign businesses in Vietnam (Decree 72) has recently been replaced by the Decree 07/2016/ND-CP (Decree 07) issued by the Government on 25th January 2016 which will apply from 10th March 2016 and brings some significant changes as follows:



1. The prominence of international law, and especially undertakings of Vietnam in international treaties, is underlined. This is a significant step toward international integration of Vietnam. Operational contents of RO must be consistent with Vietnam’s undertakings under the Decree 07, if the foreign company has its seat in a Country having such international treaty with Vietnam. 

2. The operating scope of RO seems to be tightened. According to Decree 07, operating contents of RO is solely to execute the function of a liaison office, conduct market research and promote the business investment opportunities for foreign company. Other functions such as “Monitoring and activating performance of contracts of the foreign business entity that it represents which have been signed with Vietnamese parties or which relate to Vietnamese markets” as stipulated in the Decree 72 have been removed.

3. The matter on certifying and legalizing foreign documents is clearly detailed in order to avoid misunderstanding. Accordingly, during each administrative process, the Decree 07 specifies the type of documents which need the certification or legalization. Good news: audited financial statement and operational charter of the foreign company are not any more to be legalized. A certified translation in conformity with Vietnamese laws is sufficient now. Only the business registration license needs to be legalized.

4. Duration of administrative procedure is remarkably reduced in theory, for instance, from within 15 days to 07 business days in case of new issuance and to 05 business days in case of renewal of Operation License of RO, since the date of receipt of a complete and valid file, excluding the case of requesting an opinion from the line ministry.

5. The Decree 07 states a clear simplification of the administrative procedures after issuance or modification of the RO license.  RO’s obligation of publication in newspaper or electronic media within 45 days since the issuance date of License as prescribed in the Decree 72 seems to be abandoned in the new Decree. Instead, the license-issuing authority shall disclose the information about RO/Branch opening on its website within fifteen (15) days after issuance or amendment of the License. Besides, the process on operation notification of RO is no longer stipulated in the Decree 07.


As written above, the Decree shall enter into force from 10th March 2016. The RO already existing at that time shall be governed by the former Decree 72 until the expiration or amendment of their granted license. Moreover, a Circular is expected to clarify and provide for additional guidelines to the new regime.

 

It is noted that this article does not constitute a legal advice and only constitutes a public information on a general matter.Feel free to contact us for further detailed information for any specific case.

 

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