Establishing a branch of a foreign company: Process & Procedures

Establishing a branch of a foreign company is an important step to help businesses expand their markets, develop their brands, and increase business opportunities in Vietnam. Branches can operate business within the scope authorized by the parent company, creating favorable conditions for transactions and cooperation. Complying with the correct legal process will help businesses save time, reduce risks and ensure stable, long-term operations.

Right to establish a branch of a foreign company in Vietnam

According to Article 3 and Article 14 of Decree 07/2016/ND-CP detailing representative offices and branches of foreign traders in Vietnam, the right to establish a branch of a foreign company in Vietnam is recorded as follows:

• Foreign traders are allowed to establish their branches in Vietnam according to Vietnam’s commitments in international treaties to which Vietnam is a member.
• A foreign trader may not establish more than one branch with the same name within a province or centrally run city.

The Licensing agency will not issue a Branch Establishment License to foreign traders in the following cases:

• Not meeting one of the conditions for granting a Branch Establishment License according to Article 8 of Decree 07/2016/ND-CP.
• Foreign traders apply for a Branch Establishment License within 02 years from the date of revocation of the Branch Establishment License in Vietnam according to the provisions of Article 44 of Decree 07/2016/ND-CP.
• The establishment of Representative Offices and Branches is limited according to the provisions of law for reasons of national defense, national security, social order, safety, social ethics and public health.
• Other cases as prescribed by law.

Authority to issue licenses to establish a branch of a foreign company

Pursuant to the provisions of Article 6 of Decree 07/2016/ND-CP, the Department of Planning – Ministry of Industry and Trade shall issue, re-issue, adjust, extend, revoke the License to establish a Branch and terminate the operation of the Branch in case the establishment of the Branch has not been regulated in specialized legal documents.

Conditions for granting a license to establish a branch of a foreign company

Foreign traders are granted a Branch Establishment License when they meet the following conditions:

1. Foreign traders are established and registered for business in accordance with the laws of countries and territories participating in international treaties to which Vietnam is a member or recognized by the laws of these countries and territories;
2. Foreign traders have been operating for at least 5 years from the date of establishment or registration;
3. In case the Business Registration Certificate or equivalent document of a foreign trader stipulates an operating term, that term must be at least 01 year from the date of submission of the application;
4. The content of the Branch’s operations must be consistent with Vietnam’s market opening commitments in international treaties to which Vietnam is a member and in accordance with the business lines of foreign traders;
5. In case the content of the Branch’s activities is not consistent with Vietnam’s commitments or the foreign trader does not belong to a country or territory participating in an international treaty to which Vietnam is a member, the establishment of the Branch must be approved by the Minister of specialized management.

Thus, in case a foreign company does not meet one of the above conditions, it is not eligible to be granted a license to establish a branch in Vietnam.

Legal basis: Article 8 of Decree 07/2016/ND-CP.

Procedures for applying for a license to establish a branch of a foreign company in Vietnam

Prepare documents

According to the provisions of Clause 1, Article 12 of Decree 07/2016/ND-CP, an application for a license to establish a branch of a foreign company in Vietnam is a set of documents including the following documents:

1. Application for a Branch Establishment License according to the form of the Ministry of Industry and Trade signed by an authorized representative of the foreign trader (Form MD-5 Regulations in Clause 5, Article 1 of Circular No. 11/2016/TT-BCT dated July 5, 2016);
2. Copy of Business Registration Certificate or equivalent documents of foreign traders;
3. Document of the foreign trader appointing/appointing the head of the branch;
4. A copy of the audited financial statement or document confirming the implementation of tax or financial obligations in the most recent fiscal year or documents of equivalent value issued by a competent agency or organization where the foreign trader was established or confirming and proving the existence and operations of the foreign trader in the most recent financial year;
5. Copy of the Branch’s Charter of Operations;
6. Copy of passport or identity card or citizen identification card (if Vietnamese) or copy of passport (if foreigner) of the head of the branch;
7. Documents on the expected location of the Branch headquarters include:

• A copy of the memorandum of understanding or location rental agreement or a copy of documents proving that the trader has the right to exploit and use the location for the branch headquarters;
• Copy of documents on the expected location of the Branch headquarters as prescribed in Article 28 of Decree 07/2016/ND-CP and relevant legal regulations.

Note: All documents of foreign companies and legal documents of foreign branch heads must be translated into Vietnamese and authenticated according to Vietnamese law. Copies of business registration papers or documents of equivalent value of foreign traders must be certified or consular legalized by Vietnamese diplomatic missions and consulates abroad in accordance with Vietnamese law.

Licensing application process

The order and procedures for granting a license to establish a branch of a foreign company are specified in Article 13 of Decree 07/2016/ND-CP, specifically including the following steps:

Step 1: Foreign traders submit applications directly or by post or online (if eligible) to the Department of Planning – Ministry of Industry and Trade.

Step 2: Within 03 working days from the date of receiving the dossier, the Licensing Agency shall check and request additional documents if the dossier is not complete and valid. Requesting additional documents can be made at most once during the document processing process.

Step 3: Within 07 working days from the date of receipt of complete and valid documents, the Licensing Agency shall issue or not issue a Branch Establishment License to the foreign trader. In case of refusal to grant a permit, there must be a written statement clearly stating the reason.

Step 4: Skip step 3, proceed with this step in the following cases:

• The Branch’s operational content is not consistent with Vietnam’s commitments or the foreign trader does not belong to a country or territory participating in an international treaty to which Vietnam is a member. The establishment of a Branch must be approved by the Minister of specialized management.
• The establishment of a Branch has not been regulated in specialized legal documents

At this time, the Licensing Agency sends a document to seek opinions from the specialized management Ministry within 03 working days from the date of receipt of complete and valid documents. Within 05 working days from the date of receipt of the document from the Licensing Agency, the Ministry of specialized management shall issue a document clearly stating its agreement or disagreement to license the establishment of the Branch.

Within 05 working days from the date of receipt of the document from the Ministry of specialized management, the Licensing Agency shall issue or not issue a Branch Establishment License to the foreign trader. In case of refusal to grant a permit, there must be a document clearly stating the reason.

Full package service of establishing a branch of a foreign company in Long Phan

The service of establishing a branch of a foreign company in Long Phan supports businesses in completing procedures quickly and in accordance with regulations, helping the parent company expand business activities in Vietnam legally and smoothly. Our services include:

1. Consulting Before Establishing a Branch

• Conditions, rights and obligations of foreign company branches in Vietnam.
• The branch’s scope of operations is in accordance with the law.
• Documents and procedures need to be prepared to register to establish a branch.
• Tax, accounting and labor issues when operating a branch.

2. Draft & Prepare Branch Establishment Documents according to current legal regulations.
3. Submitting Documents & Working With State Agencies:

• Submit documents to the Ministry of Industry and Trade or the Department of Planning and Investment according to each case.
• Monitor the application processing process and update progress for the business.
• Adjust documents according to the requirements of the licensing agency (if any).

4. Receive License & Complete Procedures:

• Receive a license to establish a foreign company branch.
• Guide businesses to disclose branch operation information.
• Support for stamp engraving, tax registration and opening bank accounts for branches.

Establishing a branch of a foreign company helps businesses expand business activities in Vietnam legally, take advantage of market opportunities and enhance brand reputation. With support services from Long Phan, businesses will complete procedures quickly, in accordance with regulations, reduce risks and save time. Contact the hotline 0906735386 immediately for detailed advice and professional package service!