Is it necessary to establish a branch when a company wants to open a new factory?

My company wants to open a garment factory outside the company. I would like to know if it’s necessary to carry out the procedure of establishing a branch in this case.

FDVN’s opinions:

Thank you for concerning and trusting in FDVN’s legal services. We have studied the law provisions to provide you with our advice. Please kindly see the answer below:

According to Article 45 of the Law on Enterprise 2014 on branch, representative office and business location of an enterprise:

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.

Accordingly, a factory will execute the whole or a part of the company’s function and do business. Thus, if your company wants to open a garment factory outside the company, it can carry out the procedure of establishing a branch under law provisions.

Note: It is stipulated in Clause 2 Article 33 of Decree No. 78/2015/NĐ-CP that“The business location of an enterprise may be located outside its headquarters. An enterprise may only establish its business locations within the province in which its headquarters or branches are located. Within 10 working days from the date of establishment of a business location, the enterprise shall send a notification to the Business Registration Office.” Accordingly, a business location is established only when your company is in the same province or central city where the headquarter or the branch is located. If the new factory is outside the province or central city where the headquarter is located, the company must carry out the procedure of establishing a branch under law provisions.

That is the advice of FDVN to your request, based on the study of legal regulations. Hopefully FDVN's advice will be useful to you.

Legal expert: Ngo Thi My Tram

FDVN Law Firm

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