Regulations, Conditions, and Dossiers for Establishing a Representative Office of a Foreign Company in Vietnam

A representative office can provide a permitted presence for a foreign trader to explore the market and promote trade in Vietnam. It has a different purpose and operational limits from a trading company. The suitable structure and required licence should be assessed against the parent trader, planned activities and proposed premises. Restrictions on direct profit-generating activities do not mean that an office has no tax, payroll, employment or reporting responsibilities. Review the obligations arising from the actual operation before comparing the costs with another structure.

1. Legal Framework Governing the Operations of Foreign ROs

In Vietnam, the presence and operations of an RO are directly governed by the following legal documents:

• 2005 Commercial Law: Establishes the foundational regulations on the rights, obligations, and nature of operations of a foreign trader representative office.

• Decree No. 07/2016/ND-CP: Details and guides the implementation of the Commercial Law regarding Representative Offices and Branches of foreign traders in Vietnam.

Under Vietnamese law, an RO is a dependent unit of a foreign trader, established to explore the market and carry out certain trade promotion activities permitted by Vietnamese law.

2. Conditions for Establishing a Representative Office

Based on Article 7 of Decree 07/2016/ND-CP, the state management agency in Vietnam will only grant a license when the foreign trader fully meets the following 4 core conditions:

• Condition on legal status: The foreign trader must be legally established or have its business registered under the regulations of a country or territory participating in international treaties to which Vietnam is a member.
• Condition on operation time: The parent company abroad must prove it has operated for at least 01 year, starting from the date of its legal establishment or business registration.
• Condition on the validity period of the Business Registration: If the Business Registration Certificate (or equivalent document) specifies an expiration date, that validity must remain for at least 01 year from the date of submitting the registration dossier in Vietnam.
• Condition on operational objectives: The expected operations of the RO must align with Vietnam commitments in international treaties.

If they are not suitable, or if the home country of foreign companies has not participated in an international treaty with Vietnam, the licensing must be approved by the Minister of the specialized management ministry.

3. Dossier to Apply for a License to Establish a Representative Office

Once the above conditions are met, the foreign trader needs to prepare 01 dossier for RO establishment registration to submit to the Department of Industry and Trade or the Management Board of the Industrial Park/Export Processing Zone. The mandatory dossier includes the following documents:

• Application for establishing an RO: In the form prescribed by the Ministry of Industry and Trade, signed and stamped (if any) by the competent representative of the foreign trader.
• A copy of the Business Registration Certificate (or equivalent document).
• A document appointing/designating the head of the RO.
• A copy of the audited financial statements: Or documents proving the fulfillment of tax/financial obligations in the most recent fiscal year of the parent company.
• Copies of the legal documents of the head of the RO: For foreigners, a copy of their Passport; for Vietnamese citizens, a copy of their Citizen Identity Card or Passport.
• Dossier proving the right to use the headquarters location: This includes a copy of the lease contract and a copy of documents proving the legal leasing rights of the lessor (such as a Land Use Right Certificate, Certificate of House Ownership, etc.).

Confirm which foreign documents require authentication and Vietnamese translation. The appropriate route may involve Apostille, consular legalization or an applicable exemption, depending on the document and country relationship.

4. Operational Limits of Representative Offices

Besides meeting the initial conditions and preparing the correct dossier, Vietnamese law has very clear prohibitions and limits regarding the nature of operations of an RO:

• Absolutely no profit-generating business functions: An RO is not allowed to be involved in activities that directly generate profits in Vietnam (such as trading goods or providing direct services to customers).
• Not allowed to arbitrarily sign commercial contracts: The Head of the RO must not enter into, amend, or supplement contracts signed by the parent company, except in cases where there is a legal written Power of Attorney from the parent company for each specific case.

5. The Important Role of Local Legal Experts

Carrying out the RO establishment procedure on your own can lead to many difficulties as you need complex legal regulations and the likelihood of errors. Hence, Lawyers play a key role in helping you navigate all processes and ensure they are carried out accurately:

• Assessing the representative-office model, permitted scope and parent-trader documents, rather than treating the office as a newly incorporated company requiring its own company charter.
• Drafting and reviewing applications: Ensuring applications are complete and ready-to-submit to avoid rejections or delays.
• Supporting post-establishment procedures: Seal engraving, opening bank accounts, tax registration, and other related legal procedures.

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