6 things you need to know about the branch – A branch is a dependent unit of an enterprise, tasked to perform all or part of the functions of the enterprise including the function of authorized representative. However, to understand this dependent unit, the Law of Blessings will synthesize and send you 6 things to know about the branch.

1.Branches without legal character

According to Clause 1, Article 45 of the Law on Enterprises 2020, the regulations on branches are as follows:

“1. An enterprise may establish branches and representative offices in Vietnam and other countries. An enterprise may have more than one branch and a representative office in an administrative division.”

In other words, the branch is not a business and does not have its own legal persona. In fact, the branch is only a part of the enterprise; and follows the management of that business leadership apparatus. The branch is not an independent unit, separate from the business.

2.Functions of branches

A branch is a part of the business, which will of course perform all or part of the functionality of the enterprise, including the authorized representation function. Despite this, except for the non-legal person, the branch can also perform the equivalent of a business. Depending on the specific case, the branch may be authorized to represent to perform part or all of the tasks of the business.

Besides, the branch also has rights such as registering its own seal or signing economic contracts on behalf of the parent company.

Branches can declare and pay taxes separately as an independent unit if the registration case is an independent accounting branch, and a separate bank account may be opened. This is considered an advantage of this type when branches can almost be operating business equivalent to the parent company, so most businesses when they want to expand their business choose this form of branch establishment.

3.Headquarters

Enterprises must declare the full number of houses, niches, alleys, alleys or villages, communes, districts, towns, and provinces as prescribed. In addition, we can completely register branches in the same or different provinces/cities with the parent company, convenient for each unit’s work and development plan.

4.Legal representative

The legal representative shall of course have the right to coordinate all matters related to the company; including branches and representative offices.  The branch must be under the control of the legal representative. The legal representative of the branch is also the legal representative of the legal person that has been clearly specified in the charter of the legal person or the decision of the competent state agency.

And the head of the branch is not the legal representative of the branch but only the authorized representative to do things to the fullest that has been authorized by the legal representative of the legal person.

5.Name of branch

In addition to naming principles such as naming a company, which the branch must also comply with, the company branch name must include the enterprise name with the phrase “Branch”.

The name of the company branch must be attached to the head office of the branch.

6.Business sectors of branches

The business sector of the branch must be by the business sector of the enterprise.

Therefore, when establishing, it is necessary to register by the industry codes registered by the enterprise. Branches may not register occupations in which the enterprise has not registered.

Please don’t hesitate to contact us if you require any further information!