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Over recent years, Vietnam has been a promising destination for foreign investors through forms of Representative Offices or Branches in Vietnam in order to make a market research and conduct some investors’ commercial activities. Thereupon, the service of foreign investment consultancy by lawyers in Vietnam is under hot discussions than ever.

In accordance with applicable laws, the establishment, operation and termination of operation of Representative Offices (“ROs”), Branches are fundamentally governed by the Commercial Law and other guiding documents. Violating provisions on ROs, Branches in Vietnam may lead to an administrative penalty, withdrawal of establishment licenses (“ELs”) or being forced to terminate the operation of the ROs, Branches in Vietnam, even the violating enterprises might be subject to penal liability.

In order to establish ROs, Branches in Vietnam in a favorable manner and to avoid legal risks caused by breaching provisions in relation to ROs, Branches during the operation term, retaining service of foreign investment consultancy provided by lawyers in Vietnam is believed to be one of the effective solutions for the time being.

Conditions on establishment of ROs, Branches in Vietnam

In accordance with provisions of the Commercial Law, so as to establish the ROs, Branches in Vietnam, foreign traders shall have operated for at least 01 year in case of RO establishment and for at least 05 years in case of Branch establishment under the laws of the States, Territories in which such traders are incorporated or lawfully recognized.

From 10/3/2016 it is supplemented that traders’ establishment registration or recognition places shall be the States, Territories that have entered into international treaties of which Vietnam is a member and the operation contents of ROs, Branches shall be in compliance with Vietnam’s commitments under international treaties of which she is a member in accordance with stipulations of Decree 07/2016/ND-CP (“Decree 07”). Furthermore, the operation contents of Branches are obligatorily consistent with business lines of foreign traders.

The roles of consultancy on foreign investment by lawyers in Vietnam in respect of operation of ROs, Branches in Vietnam

In reality, throughout the operation term, foreign traders’ ROs, Branches in Vietnam are frequently found to face the flowing legal issues: (i) untruthfully, inaccurately, late declare contents, changes in the dossiers to be submitted for issuance, re-issuance, amendment, supplementation, extension of the ELs; (ii) not submit periodical reports on operation of the ROs, Branches with licensing authority of ELs as stipulated by the laws; (iii) not operate in accordance with operation contents of the ROs, Branches in Vietnam, which are recognized on the ELs; (iv) not perform or wrongfully perform procedures to end operation of the ROs, Branches in Vietnam as required by the laws; (v) violate obligations of the ROs, Branches in Vietnam and the head of the ROs, Branches including taxation or financial ones etc.

It depends on seriousness, nature of such violations that the competent authority shall impose monetary administrative penalty ranging from 5 million Dong to 50 million Dong with an additional penalty or remedies to correlative consequences, or withdraw the ELs of the ROs, Branches in the worst case. To reduce such severe consequences, it is necessary for foreign traders to obtain efficient and timely consultancy on legislations provided by lawyers in Vietnam specializing in foreign investment consultancy with a view to maintaining or buttressing business activity and thus intensify development of foreign traders in Vietnam.

Moreover, in respect of violations of the head of the ROs, Branches in Vietnam, depending on seriousness that such person can be imposed an administrative penalty or be subject to penal liability; violations on taxation and financial obligations shall be handled in accordance with relevant provisions on taxation.

The adoption of Decree 07 brings about changes in legislations to adapt to provisions on administrative procedures and penalties against violations relating to the ROs, Branches in Vietnam; it is predicted that provisions on penalties shall be amended in the light of stricter manner. To settle expeditiously, punctually arising issues in compliance with legal frames to be amended and simultaneously not to affect or interrupt operation of foreign traders, utilizing service of foreign investment consultancy by lawyers in Vietnam ought to be noticed for expansion and considered as an essential mechanism in running operation of the ROs, Branches in Vietnam by foreign traders.