Circular No. 3/TM-PC guiding the implementation of the Regulations on the establishment and operation of representative offices of foreign economic organizations in Vietnam

CIRCULAR

Circular No. 3-TM/PC dated February 10, 1995 of the Ministry of Commerce guiding the implementation

of the regulations on establishment and operation of representative offices of economic organizations

nước ngoài tại Việt Nam.

Pursuant to Decree No. 82-CP dated August 2, 1994 of the Government promulgating the Regulations on Establishment and Operation of Representative Offices of Foreign Economic Organizations in Vietnam and Decree No. 1790-CP dated November 2, 1994 of the Government amending and supplementing the aforementioned Regulations (hereinafter referred to as the Regulations).

After exchanging opinions with relevant sectors and localities and being approved by the Prime Minister (Circular No. 372-QHQT dated January 23, 1995), the Ministry of Commerce guides specific points in the Regulations for uniform implementation as follows:

I. SUBJECTS ELIGIBLE FOR APPLICATION FOR ESTABLISHMENT OF REPRESENTATIVE OFFICES AND AUTHORITIES WITH COMPETENCE TO ISSUE LICENSES FOR ESTABLISHMENT OF REPRESENTATIVE OFFICES

1. Subjects eligible for application for establishment of representative offices:

Foreign economic organizations as defined in Article 1 of the Regulations shall be understood as organizations established for profit-making business purposes (hereinafter referred to as Companies) if they have the requirement to establish representative offices in Vietnam to establish economic and trade relations with Vietnamese enterprises and if they meet the conditions stipulated in Article 2 of the Regulations and this Circular, they will be considered for issuance of licenses to establish representative offices in Vietnam.

A Company may choose:

- To apply for permission to establish several independent representative offices directly under the Company, with a unified name as the representative office of the Company in a province or city of Vietnam, and each representative office must have its own person in charge.

- To apply for permission to establish one representative office in a province or city and establish several branches of that office in other provinces or cities of Vietnam.

2. Authorities with competence to issue licenses for establishment of representative offices:

- The Ministry of Commerce is responsible for examining, extending, supplementing, revoking or canceling licenses for foreign companies (excluding credit institutions and banks) to establish representative offices in Vietnam;

- The State Bank is responsible for examining, extending, supplementing, revoking or canceling licenses for credit institutions and banks to establish representative offices in Vietnam.

II. CONDITIONS FOR CONSIDERATION FOR ISSUANCE OF LICENSES FOR ESTABLISHMENT OF REPRESENTATIVE OFFICES

1. The conditions for a Company to be issued a license to establish a representative office in Vietnam as stipulated in Article 2 of the Regulations are understood as follows:

- The Company is established in accordance with the laws of its home country (the country where the Company was established);

- It has been operating in its home country for at least five years;

- It has investment or trade projects of interest to Vietnam and capable of implementation aimed at promoting Vietnam's economic and trade development, specifically including:

+ Investment projects already granted permits by competent authorities in Vietnam;

+ Economic, scientific and technological contracts and/or new technology transfer agreements in compliance with Vietnamese law;

+ Contracts specializing in importing Vietnamese goods, especially those encouraged for export by Vietnam such as handicrafts, seafood, agricultural products...

In particular, Companies applying to establish representative offices to promote the establishment of investment projects or to handle procedures for obtaining investment permits in Vietnam will also be considered for establishment of representative offices with a term consistent with the time required to complete these tasks but not exceeding three years from the date of issuance of the permit.

2. Companies that are exempted from certain conditions and given priority consideration for issuance of licenses according to Clause 2 of Article 2 of the Regulations are:

- Companies that were newly established and have not yet operated for five years but have investment projects granted permits with a capital of 10 million USD or more; or import contracts for goods produced and processed in Vietnam belonging to export-encouraged categories such as handicrafts, seafood, agricultural products...

- Groups or Companies that have been established and operated abroad for at least five years and now establish new Companies to cooperate economically and commercially with Vietnam will also be considered for issuance of licenses to establish representative offices in Vietnam.

III. PROCEDURES FOR CONSIDERATION FOR ISSUANCE OF LICENSES FOR ESTABLISHMENT OF REPRESENTATIVE OFFICES

1. Companies wishing to establish representative offices or branches of representative offices in a province or city of Vietnam need to submit to the Ministry of Commerce a set of documents including:

- An application for establishment of a representative office in one copy in Vietnamese and one copy in English;

- Certificate of establishment of the Company (one original in English or a certified copy from the country where the Company was established and one translation into Vietnamese);

- A brief introduction about the Company (one copy in English and one copy in Vietnamese);

- Financial status certificate of the Company for the most recent year issued by the auditing authority of the country where the Company was established (one original in English or a certified copy from the country where the Company was established and one translation into Vietnamese);

- Investment permit or unapproved investment project; trade contract or economic, scientific and technological cooperation agreement to be proven (photocopy).

The above documents, the Company needs to send directly to the Ministry of Commerce (in Hanoi). The Office of the Ministry of Commerce will sign for receipt of the submission form of the Company. If it is not possible to send the documents directly, the Company can authorize (by written authorization) a service business organization established under Vietnamese law to act on its behalf in this matter.

2. When receiving the documents submitted by the Company:

- The Ministry of Commerce sends a document to exchange opinions with the competent state management agency related to the specialized field and with the People's Committee of the province or city where the representative office will be located.

- Within twenty working days from the date of sending the opinion exchange document, if no reply is received from the relevant agencies, the Ministry of Commerce still considers and decides whether to issue or not issue a license to the Company to establish a representative office to ensure the deadline stipulated in Article 6 of the Regulations.

3. The license for establishment of a representative office will be issued one original to the Company and one copy sent to the People's Committee of the province or city where the representative office is located.

IV. REGARDING THE OBLIGATIONS AND LIMITATIONS OF REPRESENTATIVE OFFICES

1. When receiving the license (for the first time, for additional activities, or for renewal), the Company must pay the fee prescribed by the Ministry of Finance of Vietnam. In addition to the official fee, the Vietnamese State does not collect any other fees.

2. The Representative Office shall not engage in business (production, buying and selling goods and services) for profit in Vietnam; it shall not sublet its premises, housing, nor represent other companies in Vietnam.

3. The Head of the Representative Office and employees working at the Representative Office do not have the authority to sign commercial contracts with Vietnamese enterprises, except when they have a valid power of attorney from the head of the Company.

4. The Representative Office may lease premises (at each province or city, only one location can be leased for the office), housing, and equipment necessary for operations and living according to Vietnamese law.

5. The Representative Office must register with the People's Committee of the province or city where the office is located regarding the number of foreign nationals coming to Vietnam to work at the Representative Office (including foreign nationals and Vietnamese citizens residing abroad) as specified in the license; and the number of Vietnamese nationals hired to work at the Representative Office (including Vietnamese citizens and foreigners residing in Vietnam) in accordance with the Labor Code of Vietnam, and has the responsibility to facilitate those working at the Representative Office to fulfill their obligation to pay personal income tax as required by law.

6. The Representative Office must purchase compulsory insurance types as stipulated in Article 14 of the Regulations and guidelines issued by the Ministry of Finance of Vietnam.

7. The Representative Office may open a dedicated expenditure account (in foreign currency or Vietnamese currency with a foreign currency origin) at a bank established and operating under Vietnamese law for administrative expenses; this account may not be used for business purposes, service profits, or as a transit account (receiving Vietnamese currency into the account to convert foreign currency out of the country or to pay for goods in Vietnam).

8. The Representative Office may import into Vietnam necessary items for work and living needs, but must pay taxes according to the current Export and Import Tax Law of Vietnam and must follow the import procedures as prescribed by the General Department of Customs.

9. The Representative Office may engrave a separate seal clearly indicating which company it represents, located in the province, city... according to the size and model prescribed by the Ministry of Home Affairs of Vietnam, and may only use the seal in administrative transactions in Vietnam.

V. REGARDING THE REGISTRATION OF THE REPRESENTATIVE OFFICE'S ACTIVITIES

1. Within the latest period of 90 days (for the initial license) or 15 days (for renewal or additional license), from the date of issuance of the license, the Company must submit to the People's Committee of the province or city where the Representative Office is located, the registration activity dossier including:

- Registration of activities;

- Lease agreements and related documents for renting premises in Vietnam;

- Employment contracts and related documents for hiring labor in Vietnam;

- Appointment letter of the Head of the Representative Office issued by the head of the Company;

- Curriculum vitae of the Head of the Representative Office, of those recruited from abroad and hired in Vietnam to work in the Representative Office.

2. The People's Committee of the province or city where the Representative Office is located is responsible for approving the registration within 15 days from the date of receipt of the complete registration dossier of the Company.

3. After approving the registration of the Representative Office, the People's Committee of the province or city must send a copy of the registration certificate to the Ministry of Trade for monitoring and inspection.

VI. REGARDING THE CHANGE OF NAME, RENEWAL, ADDITION TO LICENSE AND TERMINATION OF THE REPRESENTATIVE OFFICE'S ACTIVITIES

1. Change of name of the Representative Office: The Representative Office may only change its name if the Company has changed its name in compliance with the laws of the country establishing the Company.

In cases of merger, dissolution, or capital contribution to establish a new legal entity with a new name and functions, if there is a request to set up a Representative Office in Vietnam, the new Company must go through the procedures anew according to current regulations.

2. Renewal of the Representative Office's license: When the license is about to expire, if there is a request for renewal, the Company must submit to the Ministry of Trade 30 days before the expiration date a dossier including:

- The Company's request for license renewal;

- A summary report on the Representative Office's activities during the validity period of the license;

- The opinion of the People's Committee of the province or city where the Representative Office is located regarding the renewal.

3. Addition to the Representative Office's license:

a) Modification and addition to the scope of activities: The Representative Office may only propose modifications and additions to the scope of activities if these modifications and additions comply with the functions and tasks of the Company or if the functions and tasks of the Company have changed according to the laws of the country establishing the Company and are in compliance with Vietnamese law;

b) Additional staff at the Representative Office: The Representative Office may only add staff recruited from abroad to work in Vietnam upon approval by the Ministry of Trade. Regarding staff recruited in Vietnam, the Representative Office only needs to register with the People's Committee of the province or city and is not limited in number.

4. Termination of the Representative Office's activities:

a) In cases where the Representative Office terminates its activities as provided in Points 2 and 3 of Article 10 of the Regulations, the Ministry of Trade will notify the Company and the People's Committee of the province or city where the office is located 30 days before termination.

Specifically, in the case where the Representative Office terminates its activities as provided in Point 2 of Article 10 of the Regulations, the Company must submit a request to the Ministry of Trade 60 days before the planned termination date, upon approval by the Ministry of Trade.

b) The Representative Office may have its license revoked in cases of violation of Vietnamese law to the extent of being fined $20,000 or more (excluding repeat offenses).

c) In cases where the Representative Office ceases operations, the People's Committee of the province or city where the Representative Office is located shall be the competent authority to supervise, inspect, and urge the fulfillment of the Representative Office's obligations as stipulated in Article 11 of the Charter.

VII. REGARDING MANAGEMENT RESPONSIBILITIES, INSPECTION AND PERIODIC REPORTS

1. Management and inspection responsibilities of Vietnamese state management agencies:

a) The Ministry of Commerce shall be responsible for:

- Uniformly administer state administrative affairs for all activities of the Representative Office in Vietnam.

- Serve as the coordinating body with relevant agencies and localities to organize inspections on all activities of the Representative Office when deemed necessary and/or upon request from ministries, sectors, and/or the People's Committees of provinces and cities concerned.

b) Relevant ministries and sectors have the responsibility:

- To manage state affairs within their specialized fields according to their functions, tasks, and authorities, and promptly exchange opinions with the Ministry of Commerce and/or the People's Committee of the province or city where the Representative Office is located regarding issues arising that relate to the Representative Office's activities to coordinate directives;

- To participate with the Ministry of Commerce and/or the People's Committee of the province or city where the Representative Office is located in inspecting the Representative Office's activities and to propose to the Ministry of Commerce and/or the People's Committee to issue decisions to handle violations within their jurisdiction.

c) The People's Committee of the province or city where the Representative Office is located has the responsibility:

- To administratively manage Representative Offices within its territorial area, including administrative management and procedures such as leasing premises, hiring labor, registration as prescribed, and all activities of the Representative Office at the local level;

- To periodically (annually) or urgently chair coordination with relevant agencies to organize inspections at the local level on all activities of the Representative Office pursuant to a written decision by the Chairman of the People's Committee of the province or city.

- In cases where it deems necessary, to propose the Ministry of Commerce to chair coordination with relevant agencies to organize inspections on the Representative Office's activities at the local level according to a written decision by the Ministry of Commerce.

2. Regarding periodic reports:

- Every six months, the Representative Office shall submit a written report (in Vietnamese and English if necessary) to the Ministry of Commerce and the People's Committee of the province or city where it is located about its activities (the mid-year report should be submitted before July 15, and the annual report should be submitted before January 20 of the following year).

- In cases where necessary, the Ministry of Commerce and the People's Committee of the province or city where the Representative Office is located may require the Representative Office to submit ad hoc reports outside the aforementioned periodic reports.

VIII. EFFECTIVE DATE

This Circular replaces Circular No. 4-TN/PC dated May 6, 1991, of the Ministry of Trade and takes effect from the date of issuance.

During implementation, if there are difficulties, obstacles, or new issues arise, ministries, ministerial-level agencies, government agencies, and People's Committees of provinces and cities are requested to promptly reflect these to the Ministry of Commerce for resolution within their jurisdiction or to report for instructions from the Prime Minister.