Representative office is one of the most popular foreign investment vehicles in Vietnam. It is a legal entity that investors utilise to make a presence in the Vietnamese market. They analyse the market trends in Vietnam through a representative office before setting up a limited liability company.
You will find all important details about establishing a representative office in Vietnam in this handy Q&A article.
Questions and Answers
What is the major difference between a representative office and a foreign-owned limited liability company?
Unlike a foreign-owned limited liability company, a representative office has much fewer functions. The major difference is that a representative office is forbidden to get involved directly in business activities, such as business negotiation or contract signing with local companies. This is because any revenue-generating activities are not allowed for a representative office.
Since a representative office cannot take part in business activities that generate income, what are its functions then?
As mentioned, a representative office cannot participate in any profit-generating commercial activities in Vietnam. So the main functions of a representative office is to promote the products of its parent company, supervise and control the quality of products, and communicate information to its parent company. A representative office can only deal with the clients of its parent company.
How to be eligible to set up a representative office in Vietnam?
The process of establishing a representative in Vietnam is relatively simple as compared to setting up a full force foreign-owned company.
In accordance with the Commercial Law in Vietnam, a company is only eligible to set up a representative office when it:
- is an international trading company or a foreign business entity
- obtains an establishment license for its representative office
- receives a seal with representative office’s name
- has a legal establishment with a minimum of one year operation
- has effective business activities
- is in a market or sector with high demand in Vietnam
Then, what documents should I prepare if I am eligible?
Below is a list of documents you need to prepare to establish a representative office:
- An application form from the Ministry of Industry and Trade and signed by the foreign company’s representative
- Copies of business license or business registration certificate of the parent company
- A certified letter of appointment in Vietnamese
- Certified copies of financial statements or financial certificates in Vietnamese
- Copies of lease agreement
- Copies of office location’s documents
- Certified and legalised copies of the representative’s head’s passport (translation to Vietnamese is also required)
How long does it take to receive the representative office license once I have submitted all documents?
It takes approximately 20 working days to receive the representative office license. This can only happen when you submit valid and complete documents.
What is the validity of the representative office license?
A representative office has a validity of five years. During these five years the parent company must be in operation. You can extend the license validity.
Can you be more exact of what the restricted activities of a representative office in Vietnam?
The law prohibits a representative office from partaking in the activities below:
- Taking part in profit-making activities such as sales transactions and direct trading activities
- Receiving purchase orders
- Coordinating purchases and sales for its parent company
- Negotiating and signing contracts
- Settling claims and submitting tenders
- Issuing invoices
- Ordering, purchasing and paying for goods for its parent company
- Providing after-sale services for the parent company’s products or services
- Acting as an agent and carrying out activities between clients and the parent company
Setting Up Your Representative Office in Vietnam with Cekindo
If you need further details on how to set up your representative office in Vietnam, get in touch with us by filling in the form below. Our legal experts would be happy to provide you with necessary guidance.
