Suspension procedures for representative offices of joint stock companies

Suspension procedures for representative offices of joint stock companies helps businesses proactively manage business activities when facing difficulties or needing to adjust development strategies. Complying with the legal process not only helps businesses avoid administrative sanctions but also protects their rights during the suspension period. This is an important step to ensure transparency and compliance with corporate laws.

When does a joint stock company’s representative office temporarily stop operating?

A representative office according to Clause 2, Article 44 of the Law on Enterprises 2020 is a dependent unit of the enterprise, established for no business purpose or generating revenue. Representative offices only perform the function of authorized representatives for the interests of the enterprise, carry out trade promotion activities and protect the legal rights of the enterprise.

Representative offices do not generate direct revenue but only support the parent company in communication activities, market research and partnership development.

A joint stock company has the right to decide to temporarily suspend representative office operations in many cases such as:

• There is no longer a need to maintain an office at that location;
• Completed market goals in the region;
• Need to restructure operating costs;
• Adjust business strategy.

According to the provisions of Clause 1, Article 66 of Decree 01/2021/ND-CP, the company must send a notice of temporary suspension of operations to the Business Registration Office where the representative office is located at least 03 working days before the official date of suspension.

Temporary suspension of representative office operations must strictly comply with current legal regulations. The maximum business suspension period for each notification must not exceed 01 year. If the enterprise wishes to continue the suspension after the end of the notified period, it must carry out re-notification procedures in accordance with regulations.

>>> Reference: Regulations on branch names, representative offices, and business locations.

Suspension procedures for representative offices of joint stock companies

Suspension procedures for representative offices of joint stock companies include preparing documents and submitting them to competent authorities. Specifically:

Prepare documents

To carry out procedures for temporary suspension of operations for representative offices, joint stock companies need to prepare complete documents according to regulations.

The application for temporary suspension of representative office operations includes the following documents:

1. Notice of temporary business suspension of representative office according to form Appendix II-19 issued together with Circular 01/2021/TT-BKHDT.
2. Request for supplementation and update of operation registration information for representative offices (form Appendix II-15 issued together with Circular 01/2021/TT-BKHDT) for companies operating under an Investment License, Investment Certificate or documents of equivalent legal value but have not supplemented or updated business registration information.
3. In case the person carrying out the procedure is not a legal representative, a valid authorization document is required for the person carrying out the procedure to suspend the representative office.
4. A valid copy of the authorized person’s personal identification document, which can be one of the following documents:

• For Vietnamese citizens: Citizen identification card or ID card or valid Vietnamese Passport.
• For foreigners: Foreign passport or valid document replacing a valid foreign passport.

Legal basis: Clause 1, Article 66 of Decree 01/2021/ND-CP.

Implementation procedures

The process of implementing procedures to temporarily suspend the operation of a joint stock company representative office is specifically stipulated in Article 66 of Decree 01/2021/ND-CP. Businesses need to follow the correct steps in the process to ensure the procedure is carried out legally and effectively.

The procedure for temporarily suspending representative office operations includes the following steps:

Step 1: Submit application:

Joint stock companies can choose one of the following three application submission methods:

• Submit directly to the One-Stop Department of the Business Registration Office under the Department of Planning and Investment of the province/city where the representative office is located.
• Submit via postal service to the address of the Business Registration Office.
• Submit online via the National Business Registration Portal at: https://dangkykinhdoanh.gov.vn (this method is recommended).

Step 2: The Business Registration Office issues a receipt and processes the documents:

Processing time limit: According to the provisions of Clause 3, Article 66 of Decree 01/2021/ND-CP, within 03 working days from the date of receiving valid documents, the Business Registration Office will check the validity of the documents and issue a confirmation of the representative office’s temporary business suspension.

Step 3: Get results:

• If the application is valid, the Business Registration Office will issue a Certificate of temporary suspension of operations of the registered representative office.
• In case the dossier is not valid, the business will receive a notice requesting to amend and supplement the dossier.
• Enterprises can receive the results of document processing through one of the following methods: Receive directly at the One-Stop Department of the Business Registration Office or receive via postal service at the registered address.

Note: People who come to receive results directly need to bring a receipt. If the recipient of the results is an authorized person, it is necessary to present a written authorization and a copy of a valid personal identification document.

Can a representative office that has temporarily suspended operations resume operations?

After temporarily shutting down, representative offices can completely resume operations. Current laws create conditions for businesses to be flexible in managing the operations of dependent units. The continued operation of representative offices after the temporary suspension is specifically regulated in Article 66 of Decree 01/2021/ND-CP.

Joint stock companies have two options regarding the suspended representative office:

1. Continue operations after the end of the announced suspension period:

The representative office will automatically resume operations when the previously announced suspension period expires. At this time, the enterprise does not need to carry out the procedure for notification of resumption of operation if the operation time is in accordance with the time limit registered in the original Notice of suspension.

2. Continue operations before the announced deadline:

If a business wants its representative office to resume operations before the announced suspension period, the company must carry out registration procedures to resume operations before the deadline.

According to the provisions of Clause 1, Article 66 of Decree 01/2021/ND-CP, enterprises must send a notice to the Business Registration Office where the representative office is located at least 03 working days before the date of resumption of operation.

The Business Registration Office will issue a confirmation that the registered representative office continues to operate before the announced deadline.

In case an enterprise wishes to continue temporarily suspending representative office operations after the end of the notified period, the company must carry out a new temporary suspension notification procedure. This notice must be sent to the Business Registration Office no later than 03 working days before the date of continued suspension of operations.

Important note: While the representative office is temporarily closed, the business must still fulfill all tax obligations, continue to pay debts, and complete the contract signed with customers and employees, unless otherwise agreed by the parties involved.

>>> See more: Procedures for revocation of branch/representative office operation registration certificate.

Frequently asked questions about temporary suspension of representative office operations

Below are some frequently asked questions, please refer to:

Does temporarily suspending representative office operations affect the legal status of the joint stock company?

The temporary suspension of representative office operations does not affect the legal status of the joint stock company. The company still maintains its legal status and operates normally according to its business registration. Temporary suspension of operations only applies to representative offices – a dependent unit, and does not affect the general operations of the business.

How do businesses need to manage human resources at representative offices that are temporarily suspended?

During the period of temporary suspension of representative offices, businesses can implement one of the following options: (1) Terminate labor contracts with employees according to the provisions of the Labor Code; (2) Temporarily postpone the implementation of the labor contract if there is consent from the employee; (3) Transferring employees to another unit of the enterprise; or (4) Give the employee unpaid leave if agreed. Enterprises must comply with labor laws and agreements with employees.

How much does it cost to carry out procedures to temporarily suspend representative office operations?

Official costs for procedures to temporarily suspend representative office operations according to current regulations are not required. However, businesses may incur other costs such as: document notarization costs (if any), consulting service costs (depending on the service provider), travel costs and procedure time. If you use a professional consulting service, the fee usually ranges from 1-3 million VND depending on the scope of service.

What is the difference between temporary suspension of operations and termination of representative office operations?

Suspension of operations is a temporary status, with a maximum duration of 1 year for each notification, and the representative office can resume operations after the suspension period. Meanwhile, termination of operations is a permanent status, the representative office will be removed from the registration system and must go through new establishment procedures if it wants to resume operations. The termination procedure is more complicated, requiring liquidation of assets, settlement of obligations and tax settlement reports.

Do businesses have to notify tax authorities when temporarily suspending representative office operations?

Yes, businesses need to notify the direct tax authority about the temporary suspension of representative office operations. According to the provisions of Article 37 of Circular 80/2021/TT-BTC, businesses must submit a notice of temporary suspension of operations to the tax authority at least 01 working day before temporarily suspending operations. This notification helps businesses avoid being subject to tax enforcement measures during the temporary suspension period.

Can a representative office temporarily suspend operations multiple times in a row?

The law does not limit the number of times a representative office can temporarily suspend operations. Enterprises can carry out the suspension procedure many times in a row, each time not exceeding 01 years. After the announced suspension period expires, if the enterprise wishes to continue the suspension, it must carry out the new suspension notification procedure no later than 03 working days before the date of continued suspension.

How should businesses handle assets and equipment of representative offices during the temporary suspension period?

During the temporary suspension of representative offices, businesses have the following options: (1) Maintain assets at the office location if they continue to maintain the lease contract; (2) Move assets to the headquarters or another location of the enterprise; (3) Sell or liquidate an unnecessary portion of assets; (4) Rent or lend assets (comply with internal regulations). Enterprises need to prepare a record of asset inventory before temporary suspension and have an appropriate preservation plan.

Procedures consulting services are temporarily suspended for representative offices at Long Phan Consulting Company

Long Phan Consulting Company provides professional support for suspension procedures for representative offices of joint stock companies with a team of experienced experts. We support businesses to carry out procedures quickly and accurately according to current legal regulations. Our consulting services help businesses save time, costs and ensure legal compliance.

Long Phan Consulting Company provides comprehensive consulting services, including:

• Draft and complete documents for temporary suspension of representative office operations in accordance with regulations;
• Enterprise representative carries out procedures to temporarily suspend representative office operations at a competent state agency;
• Consulting on legal issues arising during the temporary suspension of representative office operations;
• Receive results and hand over to customers;
• Advice on procedures for notification of resumption of operations.

With many years of experience in the field of business consulting, Long Phan Consulting Company is committed to providing customers with professional, fast and effective services. We always put the interests of the business first and strive to find the optimal solution for each specific case.

Conclude

The suspension procedures for representative offices of joint stock companies are not overly complex but require strict compliance with legal regulations. Please contact Long Phan Consulting Company via the hotline 1900636389 to get the best support in implementing this procedure, ensuring legal rights and saving time and costs for your business.