IF A COMPANY WANTS TO OPEN ANOTHER FACTORY, DOES IT NEED TO ESTABLISH A BRANCH?

Our company wants to open a garment factory outside of the company. I would like to know if we have to establish a branch in this case.

Thank you.

FDVN’s opinions:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

According to Article 45 of the Law on Enterprises 2014 regarding branches, representative offices, and business locations of enterprises:

“1. A branch is a unit dependent on the enterprise and obliged to perform part or all of the enterprise’s functions, including representation under authorization. The business lines of the branch must be consistent with those of the enterprise.

2. A representative office is a unit dependent on the enterprise and obliged to represent the enterprise’s interests under authorization and protect such interests.

3. Business location is a place where the enterprise does some particular business activities.”

According to the provisions cited above, the factory will be obliged to perform a part or all of the enterprise’s functions and it will carry out the business activities.  Therefore, your company is allowed to register a branch or business location if it sets up another factory that is outside of the company.

Note: According to Clause 9, Article 1 of Decree 108/2018/ND-CP: “The business location of an enterprise may be located outside its headquarters. Within 10 working days from the date of establishment of business location, the enterprise shall send a notification to the Business Registration Office of the area where the business location is located.”

Therefore, your company is allowed to carry out the procedures of establishing a branch or a business location.

Above is FDVN Law Firm's opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.

Legal Advisor: Ngo Thi My Tram

FDVN Law Firm

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