If you need to expand your scale of operations or expand your business to new markets, expanding more branches and offices is inevitable. However, for first-timers, the procedures for establishing a representative office of a joint stock company are relatively complicated and do not know what to prepare to open a representative office. Before proceeding with the procedures to establish a representative office, please immediately refer to Viet My’s article below for more useful legal information.

1. What is a representative office?

According to Article 44 of the Enterprise Law 2020, a representative office is a affiliated organization of the company, with the task of representing and protecting the company’s interests as authorized.

Enterprises have the right to establish representative offices domestically and internationally. A company can have one or more representative offices in one location depending on the administrative boundaries.

Representative offices have the following functions:

• Representative offices have no business function and are not allowed to carry out trading activities, generate revenue, or sign contracts with customers.
• The main function of a representative office is that of a liaison office. We conduct research, provide information and help companies reach new markets and partners.
• A company that wants to conduct market research or promote its brand in a place other than where the company is headquartered must establish a representative office.
• Representative offices can only carry out promotional and business activities on behalf of the company.

2. Advantages and disadvantages of establishing a representative office

a. Advantages of establishing a representative office

• Do not carry out tax procedures or license fees for representative offices.
• A company can have a representative office in the same place as its headquarters or in another province.
• The company can open representative offices abroad
• The main purpose of establishing a representative office is to help companies develop markets or promote their brands in other provinces.

b. Disadvantages when establishing a representative office

• Representative offices are not allowed to conduct any business activities.
• Even in the case of moving a representative office to another district, you still have to confirm other obligations and confirm tax obligations with the tax authority of the old address.

3. Conditions for establishing a representative office

In general, the conditions for opening a representative office of a Vietnamese company are very simple and different from the conditions for opening a representative office of a foreign company. To register with a representative office, you must first meet the following requirements:

• Acting as an official representative of the company, not a business function. The name of the representative office must be established in accordance with the law, must not overlap with or cause confusion with the name of the joint stock company, and must not use the name of the government agency, armed organization, or the name of the government agency.
• The name of the representative office must include the company name and must have the suffix “Branch” for branches and “Representative Office” for representative offices.
• When making signs, the name of the representative office should be in capital letters or in a smaller font size than the Vietnamese name of the parent company. This rule also applies to transactional papers, documents and publications issued by representative offices. The representative office signing the contract requires the company’s consent and seal.
• Representative offices do not have the authority to sign separate contracts in their own name. Representative offices must establish headquarters and headquarters according to the provisions of law.

4. Documents and procedures for establishing a representative office of a joint stock company in 2024

When preparing documents and procedures to establish a representative office of a joint stock company, the following requirements must be followed:

4.1 Documents for establishing a representative office of a joint stock company in 2023

• Announcement of establishment of representative office for joint stock company
• Minutes of meeting to establish representative office of joint stock company
• Resolution to establish a representative office of a joint stock company
• Decide to appoint the Head of the representative office of a joint stock company if that person is not the legal representative, shareholder, partner, or owner of the joint stock company.
• 01 copy of valid ID card/citizen identification card/passport of the head of the joint stock company representative office;
• Letter of introduction or authorization letter of the person applying to establish a representative office of a joint stock company.
• 01 copy of valid ID card/ID card/Passport of the applicant to establish a representative office of a joint stock company

When a company establishes a representative office abroad

• Please complete the setup procedure according to local regulations.
• Companies opening representative offices abroad do not need to carry out procedures for issuance of foreign investment certificates.
• Businesses only need to complete foreign exchange transaction registration procedures to be able to send money abroad to serve business activities.
• After being granted a license abroad, submit the license to the Business Registration Authority where the company’s headquarters is located and update information on the domestic Business Registration Portal.

4.2 Procedures for establishing a representative office of a joint stock company in 2023

Step 1: Draft documents to establish a representative office

01 notarized ID card of the head of the representative office;
Information about representative office name, registered office and phone number.
01 Copy of Business Registration Certificate of public company.

Step 2: Draft documents to establish a representative office and sign the establishment documents

Step 3: Submit documents to establish a representative office of a joint stock company and announce its establishment

Documents to establish a representative office must be submitted to the business registration agency of the state or city where the representative office is located.
To publish your representative office information on the National Business Portal, you must pay a publication fee.

Step 4: Issue company registration certificate to representative office

Within 3 working days from the date of receipt of valid documents, the Commercial and Licensing Office will issue a Company Registration Certificate to the company’s representative office.
If the company establishes a representative office abroad: After the company is granted a license to operate abroad, the company must submit documents to the Commercial Registration Authority. The business registration agency adds information about business representatives to the national database of business registration agencies.

Step 5: Carve the mark

To facilitate the signing of useful records and documents in the activities of the Representative Office, the representative office’s seal must be affixed.

5. Some notes when establishing a joint stock company representative office in 2024

a. Subject to establish representative office of joint stock company

Similar to branches and permanent establishments, all companies with a commercial license can establish representative offices in accordance with the law.

In addition, foreign traders also have the right to establish representative offices in Vietnam.

b. Name of representative office

The choice of representative office name will also comply with the provisions of the Enterprise Law 2020 and relevant guiding documents. According to the provisions of the Enterprise Law 2020 and Decree 01/2021/ND-CP on Business Registration, the name of the representative office will be recorded as follows:

The name of the representative office must be written in the Vietnamese alphabet, F, J, Z, W, numbers and symbols.
The name of the representative office must include the company name and the words “Representative Office”. In addition to Vietnamese names, our representative office can register names in foreign languages ​​and abbreviations.
A foreign name is a Vietnamese name translated into the Latin language of a foreign country. Abbreviations are abbreviations of Vietnamese names and foreign names.
The proper name of the company’s representative office must not contain the words “company” or “company”. The name of the representative office must be stated or displayed at the representative office’s headquarters.

c. Representative of representative office

A person appointed by the company, has full legal capacity and can be the legal representative of the company or another person.

d. Representative office signs the contract

Representative offices function as official representatives of the company and do not have sales functions. Therefore, the head of the representative office is only allowed to sign contracts and affix the representative office’s seal for transactions serving the representative office’s operations such as office supplies.
The representative office signing the contract requires the company’s consent and seal. Representative offices do not have the authority to sign separate contracts in their own name.

d. Regulations on license tax for Representative Offices

Foreigners operating in production and business under Decree 139/2016/ND-CP amending and supplementing a number of articles of Decree 139/2016/ND-CP regulating resource tax and Decree 22/2020 /ND-CP The office must provide: You will pay annual license tax of 1,000,000 VND.

However, Official Dispatch No. 658/TCT-CS of the General Department of Taxation clearly states that representative offices that do not engage in production, business or service activities do not have to pay natural resources tax, if any.

6. Frequently asked questions about procedures for establishing a representative office of a joint stock company

6.1 Who is the person named to establish the representative office?

The company director and other high-level positions can also be the head of the representative office or a person with full legal capacity and not violating the law.

6.2 Is it necessary to engrave a new seal for a representative office?

This can be new or unstamped, depending on the needs of the company.

6.3 What is the business function of a representative office?

Trading and marketing.

6.4 Where is the representative office doing tax accounting?

A representative office depends on its parent company.

6.5 Tax declaration procedures, how much tax do I need to pay for a representative office?

The current representative office license tax is 1,000,000 VND/year.

Above is our advice on procedures for establishing a representative office of a joint stock company. If you need to establish a representative office, please contact VIET MY LAW AND ACCOUNTING for advice and professional full service services. We will accompany you in the process of establishing and operating a representative office.