PROCEDURES FOR BRANCH ESTABLISHMENT AND SOME NOTABLE POINTS FOR ENTERPRISES

When the business process gets stabilized and developed, enterprises often plan to expand their business scope through branch establishment. What is a branch and how to legally establish a branch? The following information will answer questions related to the above issue.

1. What is a branch?

According to the provision of Article 44 of the Law on Enterprises 2020, a branch is a dependent unit of an enterprise with the task of performing all or some of the functions of the enterprise, including the function of an authorized representative.

Note: The lines of business of the branch must be consistent with the lines of business of the enterprise.

2. Procedures for branch establishment

According to the provisions of Article 31 of the Law on Enterprises 2020, enterprises need to follow these steps to establish branche(s):

Step 1: Enterprise submit application file for branch registration

The enterprise shall send an application file for registration of operation of the branch to the Business Registration Office where the branch is located. Records include:

A notice of establishment of the branch signed by the legal representative of the enterprise;

A copy of the establishment decision of the Members' Council (for multi-member limited liability companies, partnerships), Administrative Council (for joint stock companies), Owner (for one member limited company);

A copy of the minutes of the meeting on the branch establishment of the Members' Council (for multi-member limited liability companies, partnerships), Administrative Council (for joint stock companies);

Power of attorney to carry out the procedures for branch establishment (if the enterprise authorizes another person to do it).

Way to submit: Submit directly to the Business Registration Office or through the National Portal on Business Registration.

Step 2: The Business Registration Office considers the validity of the application file

Processing time: 03 working days from the date of receipt of the file.

Result:

In a case where the file is invalid, the Business Registration Office must notify the enterprise in writing of the items required to be amended or supplemented.

If the file is valid, the Business Registration Office issues a certificate of registration of operation of the branch and updates the business location information in the National Business Registration Database for Enterprises.

3. Some legal notes for branch establishment

3.1. Branch name

Article 40 of the Law on Enterprises 2020 stipulates that the branch name must follow these conditions:

The name of a branch must be written using the letters in the Vietnamese alphabet, letters F, J, Z, W, and numerals and symbols.

The name of a branch must include the name of the enterprise together with the words "Chi nhanh";

The name of a branch must be written or affixed at the head office of the branch. The name of the branch shall be printed or written in smaller size than that of the Vietnamese name of the enterprise on transaction papers, documents, materials and printed matter issued by the branch.

3.2. Annual License fee

According to Circular 302/2016/TT-BTC of the Ministry of Finance, enterprises must declare license fee before the last day of the month the branch

License fee: 1,000,000 VND/year

3.3. About declaring other taxes

In case the enterprise’s branch chooses the independent accounting method, the enterprise shall declare and implement tax procedures with the tax authority directly managing the branch.

ADK & Co Vietnam Lawyers Law Firm