Vietnam: Procedures To Be Followed In Vietnam When Domestic Enterprises Establish Representative Offices Abroad

Nowadays, many domestic enterprises are looking to invest abroad. However, similar to foreign-invested enterprises when investing in Vietnam, Vietnamese enterprises may face many challenges related to market factors and the legal conditions of the host country. For this reason, Vietnamese enterprises tend to set up a representative office in the host country to promote business activities abroad, while learning about the market and seeking official investment opportunities in the host country.

Due to their specific nature, representative offices in many countries cannot generate revenues and profits because they are not allowed to conduct business. Therefore, according to the current Law on Investment, outward investment is defined as the transfer of investment capital from Vietnam to another country and the use of profits from the investment capital to carry out business investment activities abroad. It can be seen that the establishment of a representative office abroad is an outbound investment. However, in order to establish a representative office abroad, Vietnamese enterprises must comply with other administrative procedures in Vietnam, in addition to the regulations of each host country.

1. Procedures for the notification of the establishment of a representative office abroad

FPT currently has representative offices in 29 countries and territories. Source: https://fpt.com/

According to Clause 4 Article 31 of Decree 01/2021/ND-CP, the establishment of an overseas representative office shall be carried out according to the law of the host country. However, within 30 days from the date of official establishment, the enterprise establishing the overseas representative office shall send a written notice to the Business Registration Office where the headquarters of such establishment is located.

This is only a notification procedure after the establishment of an overseas representative office has been completed. Therefore, domestic enterprises are not required to comply with any domestic requirements in order to establish a representative office abroad. Instead, they will have to pay more attention to the conditions in the host country.

At present, the registration process is quite simple; companies will complete this process online through the National Business Registration Portal. The company only needs to fill in the form in Appendix II-8 of Circular 01/2021/TT-BKHDT and submit a copy of the operational registration certificate of the overseas representative office or equivalent documents.

2. The procedure to obtain a license to open and use a foreign currency account abroad

Although it is not necessary to carry out investment procedures before establishing a representative office overseas, to pay for the representative office's overseas operating expenses and, in some cases, to meet the conditions for establishing a representative office overseas, domestic enterprises must carry out procedures to obtain the license to open and use the foreign currency account overseas before opening and using the foreign currency account overseas. These cases are currently specified in Clause 1, Clause 2 Article 3 of the Circular 20/2015/TT-NHNN.

2.1. Opening a foreign currency account to meet the conditions for establishing and operating a representative office abroad in accordance with the law of the host country

First of all, the company must determine the bank in the foreign country where it intends to open the foreign currency account and collect information such as the number of accounts, the type of foreign currency corresponding to each account, the place where the account will be opened, the bank and the address of the bank.

In addition, the company must determine the domestic bank to which it will transfer the money to the foreign country.

After collecting the above information, enterprises must prepare and submit the following documents to the State Bank of Vietnam:

a. An application for license in Appendix 01 attached to the Circular 20/2015/TT-NHNN.

b. A copy of the Enterprise Registration Certificate, Investment Registration Certificate, Establishment and Operation Certificate, or other equivalent documents in accordance with the law.

c. A copy enclosed with a Vietnamese translation of the documents of the foreign party, which proves that the enterprise must open an account in the host country to meet the conditions for establishing and operating foreign branches and representative offices in accordance with the laws of the host country.

d. A copy enclosed with the Vietnamese translation of the document issued by the competent authority of the host country allowing the establishment and temporary operation of the branch or representative office (if any).

After the complete preparation of the above-mentioned documents, enterprises must submit these documents directly or by mail to the State Bank of Vietnam (Foreign Exchange Management Department). The State Bank of Vietnam shall consider granting a license to open and use foreign currency accounts abroad within 15 (fifteen) working days from the date of receipt of complete and valid documents. In case of refusal, the State Bank of Vietnam shall issue a written notice clearly stating the reasons. If the dossier is incomplete and valid, within 07 (seven) working days from the date of receipt of the dossier, the State Bank of Vietnam shall request the enterprise in writing to complete the dossier.

The enterprise must be aware that the documents issued by the foreign agency or organization must be legalized before being submitted to the State Bank of Vietnam.

2.2. Opening a foreign currency account for the operation of a foreign representative office

Basically, this procedure is similar to the case of obtaining license to open a foreign currency account to meet the conditions for the establishing and operating of a representative office in accordance with the laws of the host country as follows:

a. Application for License in Appendix No. 01 attached to the Circular 20/2015/TT-NHNN.

b. A copy of the Enterprise Registration Certificate, Investment Registration Certificate, Establishment and Operation License, or other equivalent documents as required by law.

c. A copy of the document issued by the competent authority in Vietnam authorizing or approving the registration to establish a foreign branch or representative office.

d. A copy, together with the Vietnamese translation of the documents issued by the competent authority abroad permitting the establishment of overseas branches and representative offices.

e. The decision on the establishment of the foreign branch or representative office signed by the legal representative of the enterprise.

f. The decision on approving the annual expenses of the foreign branch or representative office.

g. Internal regulations on the operation of the branch or representative office signed by the legal representative of the company (if any).