In business and international investment activities, establishing a business, representative office, or branch of a foreign enterprise in Vietnam is a common way to expand the scale of operations, and explore and survey the market. However, to ensure the compliance of these representative offices and branches with the law, regulations on the conditions, and legal obligations of the Legal Representatives, Heads of Representative Offices, and Branches are also established and require close attention and strict compliance. In this article, we will explore the issues that an individual shall note when assuming the position of Legal Representative, Head of Representative Office, or Branch Manager.

1. Conditions and notes for Legal representatives

The conditions for individual assuming the role of legal representatives for foreign enterprise in Vietnam is not different from the conditions for legal representatives of domestic company. Accordingly:

• Company is entitled to have more than one Legal representative, and the Company’s charter will specify the rights and obligations of each Legal representative. If there are no regulations, all Legal representatives have sufficient authority and in case of damage to the enterprise, they shall be jointly responsible for the damage.
• Enterprise shall ensure that at least one legal representative resides in Vietnam. If he/she leaves Vietnam, he/she shall delegate in writing to someone who resides in Vietnam to perform the rights and obligations of the legal representative. If there is no one to act as the legal representative, the company owner, the Council of Members, or the Board of Directors shall appoint someone else to act as the company’s legal representative.
• Individual acting as Legal representatives of the company does not fall into any of the following cases: Deceased, missing; Being prosecuted for criminal liability; Being detained; Serving a prison sentence; Executing administrative measures at compulsory detoxification or compulsory education facilities; Escaping from residence; Having limited or losting the capacity for civil acts; Having difficulty in perception or controlling of their behavior; or Being prohibited by a Court from holding position, practicing certain professions, or performing certain jobs.

According to the spirit of Enterprise law, the Legal representative shall meet the following conditions:

• Being 18 years of age or older;
• Having the full capacity for civil acts;
• Not belonging to the subject of being prohibited from assuming positions, professions, or certain jobs.

2. For Heads of Representative Offices and Branches of foreign trader

The Head of the Representative Office, Branch Manager of foreign trader are responsible for managing and operating the Representative Office and Branch within the permitted activities in Vietnam. Therefore, when performing their role in Vietnam, these individuals shall pay attention to the following issues:

– The Head of the Representative Office, Branch Manager shall delegate in writing to another person to perform the rights and obligations of the head of the Representative Office and Branch Manager under the law when they exit Vietnam. This delegation of authority shall be agreed upon by the foreign trader. The head of the Representative Office and Branch Manager still have responsibility for the perform of the delegated rights and obligations.

– In case the authorization period expires and the head of the Representative Office or Branch has not returned to Vietnam and there is no other authorization, the authorized person has the right to continue to perform the rights and obligations of the head of the Representative Office or Branch within the scope of the authorization until the head of the Representative Office or Branch returns to work at the Representative Office or Branch or until the foreign trader appoints another person as the head of the Representative Office or Branch.

– In case the Head of the representative office or branch is not present in Vietnam for more than 30 days without delegating another person to perform the rights and obligations of the Head of the representative office or branch, or passed away, disappeared, detained, convicted, restricted in civil act capacity, the foreign trader shall appoint another person as the Head of the representative office or branch.

– The head of a foreign trader’s representative office is not allowed to concurrently hold the following positions:

• • The head of a Branch of the same foreign trader;
  • The head of a Branch of another foreign trader;
  • The legal representative of that foreign trader or another foreign trader;
  • The legal representative of an economic organization established under Vietnamese law.

Note: In case the Head of the Representative Office is authorized by the foreign trader to enter into, modify, or supplement a contract, the foreign trader shall perform the authorization in writing.

– The head of a Branch of a foreign trader is not allowed to concurrently hold the following positions:

• • The head of the representative office of another foreign trader;
  • The head of the representative office of the same foreign trader;
  • The legal representative of an economic organization established under Vietnamese law.

As the heads of representative offices,  Branches of foreign trader act as representatives for these traders when conducting business and promoting trade in Vietnam, the legal system imposes strict regulations on their rights, obligations, and conditions. Compliance by the foreign trader is a prerequisite for maintaining the operations of the Representative office or Branch and facilitating related procedures to adjust the operations of the Representative office, Branch.

Time of writing: 06/04/2023

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn

You can refer for more information:

• Reports that Investors shall perform in 2023
• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 1)
• Establishment of Enterprise in Vietnam, What Foreign Investors Need to Consider (Part 2)
• Procedure for Foreign Investor to contribute capital, purchase shares in the enterprise in Vietnam.
• The enterprise with opening and using direct investment capital account
• Avoiding the risks when leasing the office in Vietnam – some recommendations
• Foreign Investors provide Employment Services in Vietnam
• Franchise in Vietnam (Part 1)
• Franchise in Vietnam (Part 2)
• Tax preference when trading business in service and software product in Vietnam
• 5 steps that Investors need to set up a business in Vietnam