Setting up a Representative Office (RO) is one of the first steps in founding your company in this newly emerged Southeast Asian market. How to set - up a Representative Office in Vietnam, especially in this Covid - 19 situation? This article will provide a cutting - edge starter-pack on how you’re going to set - up your company’s Representative Office.

READ MORE: Viettonkin Trade & Procurement Consulting service to help you set up your Representative Office in Vietnam

What is a Representative Office permitted to do and NOT to do ?

A Representative Office is enabled to engage in the following activities to help promoting its parent company:

Conducting market researches;
Playing as a contact point for its parent company;
Promoting the activities of its head office through meetings and other activities, that leads to business at later stages

Representative offices may not conduct any other profitable business. A RO does not have the right to sign a separate contract on its own. The parent company bears all financial obligations arising from the operations of the Representative Office, so the accounting of the RO is dependent on the enterprise.

Thus, in case of wanting to establish more dependent units only with the function of assisting the business to access customers and partners not performing business functions, you may consider establishing representative offices to avoid having to fulfill complicated tax obligations. In addition, for the service industries not directly implemented at the address of representative offices such as tourism, construction, consulting, etc., the form of setting up one in other provinces is a wise option.

In general, a Representative Office is allowed to perform almost all activities the parent company does except direct trading and profits generating, all types of contracts must be signed by the parent company or the Representative Office. It doesn’t have the authority to sign sale and purchase contracts, all invoices and trading documents must be returned to the head office.

What you need to set up a Representative Office ? (Latest update 2020)

READ MORE: IP laws and protection in Vietnam to find more about Vietnamese law !

Pre - license checklist for setting up a Representative Office

Application for establishment of representative offices of foreign companies in Vietnam;
The legalization of the consular and the public certificate of business registration or the equivalent valuable papers of foreign traders where the foreign trader' s establishment is established;
Written appointment of the parent company;
The notarized translation of the financial statement or the written certification of the fulfillment of the tax liability or financial liability in the latest fiscal year or the equivalent valuable paper issued by the competent agency or organization in the locality where the foreign trader is established or certified or proved;
A notarized copy of the ID card (for Vietnamese) or a copy of the passport (for foreigners) of the Chief representative;
Documents on the expected location, including:

Certified copying office contract;
The certificate of the land use right certificate of the lessor (if the enterprise is hired by the enterprise to provide additional business registration certificates);
In addition, the location of the representative office of the foreign company must conform to the provisions of Vietnamese law on security conditions, order and hygiene and other conditions as prescribed by law.

Note: the entire application dossier for shall be signed and stamped by the parent company. If the parent company in foreign countries has no marks, the whole dossier must be consular legalized.

Post – licenses check-list for establish representative office in Vietnam

Once submitting your application for license, you can start arranging staffs, taxes, annual reports. Apart from those, other basic operations of a representative office, including:

Foreign currency account and VND accounts with foreign currency origin at banks licensed to operate in Vietnam. Only use this account for RO activities;
Annually written report on its activities during the year to the Department of Industry and Trade;
Set up a cash fund to record all revenues and expenditures during the operation of the RO;
Apply for a work permit for the foreign worker at the RO (if any);
Signing labor contracts with the representative and the employees of the RO;
Annually certifying the salary and income for the chief representative and the operations of the representative office;
Pay personal income tax, representative's insurance and representative office employees (if any).
- Note, when submitting all tax returns and tax receipts from state agencies. Plus, annual income tax finalization for the representative and the employees of the representative office;
Other duties in accordance with the current law;

What’s next ?

The Business Registration Office shall issue the RO operation registration certificate to your company. It usually takes 03 working days since receipt of a valid application.
Within 30 days after being granted the RO operation registration certificate, you should publish your RO operation registration information on the National Business Registration Portal.

How long does it take to establish representative office in Vietnam?

It can take from six to eight weeks in total, including getting a main license, operating license and stamp. We recommend hiring a professional service to deal with the laws and procedures.

Thanks to the absence of in-country revenue and associated licensing requirements, the setup process does not entail as many bureaucratic procedures as others.

A Representative Office license is valid for five years but can be extended for another five years.

To sum up, above are the very first guidelines to establish representative office in Vietnam. Once you get the basic principles of the Vietnamese RO establishing process, it can be much more simple. Our Viettonkin legal specialists are always ready to support you with any procedure, license and certification. If you come across any obstacle, feel free to contact us below. Viettonkin will always be ready to give you a helping hand !

One of the major steps when incorporating a company in Vietnam is choosing an individual to act as a legal representative of your company. This person represents the company before the laws and is often recognized by other individuals in transactions with the company. The importance of choosing a legal representative therefore cannot be overlooked. This article will provide a crash course on Vietnamese jurisdiction concerning legal representatives and the various roles and responsibilities such an individual will assume.

Who is a legal representative?

Every company legally registered in Vietnam is required to have at least one legal representative (đại diện pháp luật). The legal representative is, by definition, an individual representing an enterprise, exercising rights and obligations arising from transactions, representing the enterprise as a plaintiff, defendant, or authorized person before the jurisdiction and other rights and obligations as provided for by law.

To put it simply, only the legal reps. can bind the company, act on behalf of the company in legal matters as well as perform other rights and obligations of the company. The legal rep. must be involved in business activities such as application of business licenses, registered capital adjustments, and corporate bank account opening. Details of the legal representative are recorded in the business registration certificate of such company, and government authorities tend to recognize the individual whose details are recorded in the business registration certificate. Thus, the legal representative is usually an individual of a management role or higher.

Requirements for legal representatives in Vietnam

First of all, the legal representative is required to have labor contracts. There are some cases that foreigners can have Work permit exemption like the owner of a company. If you wish to register one legal rep. that needs to have a work permit, he/she needs to reside in Vietnam for a total of at least 183 days per year and cannot leave the country for more than 30 consecutive days.

For foreign investors who are not able to reside in Vietnam permanently to be the legal representatives of the company, engaging a nominee director provides a solution. A Nominee Director is a dedicated and chosen representative of the company. This person can be of any nationality but is required to reside in Vietnam full time.

Companies incorporated in Vietnam must at all time have at least one legal representative residing in Vietnam. When such individual is absent, he/she must authorize in writing another person (agent) to exercise the rights and perform legal obligations. Upon expiration of the authorization period, if the legal rep. has yet to return to Vietnam, the authorized agent continues to represent the company within the scope of authorized rights and obligations until the legal rep. returns.

Responsibilities and Roles of the legal representative

Under the Civil Code only the legal representative of a company or a person authorized by the legal rep. can act on behalf of and make decisions that bind the company. However, since there is no apparent authority doctrine under Vietnamese law, more often than not the court does hold a contract signed by a person who is not properly authorized by the legal representative enforceable against such company.

A limited company or a joint stock company may have one or more legal representatives. The company's charter specifies the number, managerial position, rights, and obligations of the legal rep. (Clause 2, Article 13 of the Law on Enterprises 2014). Enterprises can decide for themselves the number of their legal representatives in the exercise of rights and obligations arising from business transactions.

Article 14 of the Law on Enterprises 2014 stipulates that the legal representative of an enterprise assumes the following responsibilities:

Implement the assigned rights and obligations in an honest, careful and best manner to ensure the legitimate interests of the enterprise;
Loyal to the interests of the business; not using information, know-how or business opportunities of the enterprise; not to abuse the position, position or assets of the company for self-interest or for the benefit of other organizations or individuals;
Promptly, fully and accurately notify the company of the ownership of such representatives and their related persons, with dominant shares and contributed capital in the enterprises.
The legal representative of the enterprise is personally responsible for any damage caused to the enterprise by the breach of the above obligations.

When investors decide to go full-steam into setting up a business in Vietnam, selecting a trading name for the company is the first step. Even though foreign-owned companies are entirely at the discretion of business-owners, they remain subjected to Vietnamese business laws, including business naming regulations. This article provides a starter-pack on company naming regulations in Vietnam.

Things to avoid when naming a company in Vietnam

There are several mistakes that can get your business registration application rejected by the Business registration office:

Using the script of a foreign language in the proper name (Example: Classical chinese script);
Using names that are identical or nearly similar to that of a state agency, organization, or previously registered enterprise in Vietnam (more below on Copyrights of Company names);
Under Circular 10/2014 by the Ministry of Culture, Sport, and Tourism, it is not permitted for companies to use names identical to (1) the name of a historically famous person (Example: Phan Boi Chau Joint Stock Company); (2) Vietnam’s earlier country names (Example: Dai Viet Company Limited); or (3) names of individuals or words/symbols that are deemed offensive to national historical and cultural values.

Reserving a company name

When registering a foreign business in Vietnam, investors must register the company’s Vietnamese name, Foreign language name, and Abbreviated name.

While a Vietnamese name is required for licensing procedures, once registration is approved investors can choose to promote the business under any of the registered names.

Vietnamese name

Type of legal entity + proper name

Types of legal entity are normally abbreviated in Vietnamese:

Limited liability company: Công ty TNHH (Trách nhiệm hữu hạn)
Joint stock company: Công ty CP (Cổ phần)
Partnership: Công ty HD (Hợp doanh)
Private enterprise: DNTN (Doanh nghiệp tư nhân)
Branch, representative office: Chi nhánh or Văn phòng đại diện

SEE MORE: Types of legal entity in Vietnam

The proper name is written using the Vietnamese alphabet, the letters F, J, Z, W, digits and symbols.

Foreign language and abbreviated names

The company name in a foreign language is the name translated from Vietnamese into a foreign language that uses the Latin alphabet. When translated, the company’s proper name may be kept unchanged or translated into a foreign phrase (Example: Rong Vang JSC or Golden Dragon JSC).

The abbreviated name of a company can be derived from either its Vietnamese name or foreign name (Example: Công ty CP Viettonkin or Viettonkin JSC).

The foreign name must appear in a smaller size than the enterprise’s Vietnamese name at the company’s headquarter, branches, representative offices, business locations, and on its documents and publications.

Once investors settle on the name of the company, they can reserve the business name by:

Verify that the trade name conforms to Vietnamese copyright laws;
Reserve the Vietnamese name and foreign name with the Vietnam Trade Register;
Submit the abbreviated name to the Companies Registry.

The Trade register of Vietnam, referred to as the Business registration office, is the official body providing services for company name reservation and verification, business registration application processing, and company documents issuing. All paperwork regarding the status of businesses is handled and stored at the office.

How can a company change its name?

A change in the company’s name may occur at some point under several circumstances, the most common of which being:

A change of activities or goods and services of the company results in the current name being unable to represent the company
A company undergoing Mergers & Acquisitions takes the name of the taking-over business.
The current name is deemed problematic or causes confusion
Re-branding

When that happens, the company owners must fill out a notification and request to the Trade Register for changing the company names and complete the due procedure, which includes:

Amending the company’s Memorandum and Articles of Association with the new name;
Notifying all relevant authorities regarding the change;
Changing the name on all official documents and the company seal.

Rights to company names

Rights to company names (also referred to as trade names) are automatically protected under Vietnamese IP laws when it is capable of distinguishing the business entity bearing the name from other business entities operating in the same field. A trade name is considered distinctive, thus entitled to copyrights protection, if it comprises a proper name which is NOT:

Identical with or confusingly similar to the trade name of an already registered company within the same field or locality;
Identical with or confusingly similar to another person’s mark or a geographical indication protected by law.

A trade name is considered confusingly similar if :

Either the Vietnamese name, foreign name or abbreviated name is similar.
The proper name of the company is different from the same-type registered company by a cardinal number, ordinal number, symbol, or letter in Vietnamese or English alphabet immediately following the proper name.

Example: “Viettonkin JSC” and “Viettonkin 1 JSC”, “Viettonkin X JSC”, “Viettonkin’ JSC”

The proper name of the company is different from the same-type registered company by the word “New”, “Tan, “Moi”, or “North”, “East”, “South”, “West” or words in a similar vein.

All indications of commercial acts of an enterprise that are not distinctive according to the above criteria will be regarded as infringements of Vietnamese intellectual property rights. In this case, company registration will be rejected by the Business registration office.

SEE MORE: IP laws and protection in Vietnam.

To sum up, these are the first guidelines to get you started on your business endeavor in Vietnam. Company name reservation can be a simple and trouble-free process once you understand the basic principles of the Vietnamese company naming regulation. Our legal specialists are always ready to assist you with any procedures of company naming and changing name.