The Government issued Decree No. 07/2016/ND-CP (“Decree 07”) on 25 January which takes effect from 10 March 2016 to replace Decree No. 72/2006/ND-CP on representative offices (“RO”) and branches of foreign companies in Vietnam. Notable changes in Decree 07 include:

The number of RO/branch of foreign companies is likely to be limited

The Decree 07 specifies that a foreign company cannot establish more than 01 RO/branch having the same name within a centralized city, province (Article 3.2).

The permitted scope of activities of a RO appears to be narrowed.

For instance, “monitoring and stimulating of the implementation of contracts of the head office which signed with Vietnamese parties or which relate to the Vietnamese market” has been removed from the scope of RO’s activities.

Supplementing the conditions for establishment of RO/branch

According to Decree 07, a foreign company is allowed to establish a RO/branch if the origin country entered into or recognized the “international treaties” to which Vietnam is a party. “International treaties” for this purpose is not defined.

The scope of RO/branch’s activities shall be in line with the “International treaties”, unless otherwise the establishment of the RO/branch must be approved by the relevant governing ministry (Article 7). 

Other amendments

Decree 07 indicates that if the head of RO/branch is absent from Vietnam for more than 30 days, he/she must authorize another person in writing to act in his/her role during his/her absence; otherwise the foreign company must appoint a new head of the RO/branch (Article 33.5). In addition, Decree 07 does not retain a series of provisions in Decree 72 that sets out various compulsory notification procedures which were required to be completed within 45 days from the date of issuance of a RO license. Guidance of Ministry of Industry and Trade is expected to be issued and will hopefully provide clarity on some of the above changes.