Legal advices for closing its Branch Office in Hanoi

Question: We are 100% owned foreign company and are seeking legal advices for closing its Branch Office in Hanoi, can SBLAW provide the legal service for this service?

Answer: We understand that your company, (hereinafter referred to as “Client”) is now seeking legal advices for closing its Branch Office in Hanoi (hereinafter referred to as “Branch Office”).

We therefore are grateful to present you our Legal Services Proposal for your review and consideration.

1. PROCEDURES FOR CLOSING BRANCH OFFICE IN VIETNAM

Under the Vietnam’s Enterprise Law 2015, the Branch Office of an Enterprise can be terminated in accordance with decision of the Enterprise. In order to close Branch Office, Client must prepare:

• Resolution on closing Branch Office;
• List of creditors and outstanding debts, including outstanding tax, social insurance pay;
• List of employee and plan of use of employee;
• Investment Certificate of the Branch Office;
• Seal sample of the Branch Office.

Within 05 working days from submission of application dossier to the competent authority, the Branch Office shall be closed.

At this time, as Vietnam’s Enterprise Law 2015 has just come into effect and until now there have been no further guidance on this matter yet, competent authority may be cautious in proceeding with application dossier for closing branch office. However, according to our practical experience, for prudential, Client should be carefully take account following matters:

–         Liquidating Factory Lease Contract in Hanoi for the Branch Office;

–         Settling all outstanding tax obligations and social insurance pay with competent authority in Hanoi;

–         With respect to redundant employees working for the Branch Office, Client must have good plan of use of employee in order to avoid legal exposure.

2.Scope of works

Following works are proposed based on the request of Client. However, depending on the specific position/situation of Client, several work items may not be necessary. Meanwhile, other works may be required. However, any additional works shall not fall under the scope of this Legal Service Proposal, but could be provided upon request.

Roadmap for carrying out above scope of work can be described in details as follows:

1. Preparing the application dossier: We shall collect necessary information and documents from you. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within from 5 working days. The prepared documents shall then be sent to you for review, signing and seal.
2. Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the Notice of plan on dissolution of the Branch Office to the Management Board of Industrial Zones and Export Processing Zone;
3. Termination of labor contract, finalization of personal income tax and termination of office lease contract: We shall assign our associate and experts to conduct research all existed documents regarding to matters incurred during operation of Branch Office including labor, tax, social insurance and office lease etc. Generally, it shall take us about 02 working days to complete documents review. SB Law shall immediately advise Client if we need more time to fulfill the task. Upon completion of document review, SB Law shall provide Client a Report detailing current status of Client and our recommendation for approaching each issue. Then, SB Law shall assist Client to terminate labor contract with employee, settling legal matters regarding to personal income tax, social insurance and office lease contract in accordance with plan as approved by Client. Generally, it shall take us about 1-3 months to complete this work. SB Law shall immediately advise Client if we need more time to fulfill the task.
4. Submission of official report on closing Branch to the Licensing Authority. After completion of work items as described in the Item c, we shall submit documents relating to the dissolution of the enterprise to the licensing authority.

3. DELIVARABLES

The Deliverables will include documents prepared in English. Vietnamese Version shall be provided if the document is required for submission to licensing bodies. Client will review, approve and where necessary sign these documents.

4.   PROFESSIONAL FEE

4.1. The Price for performing the SB Law services as mentioned in Item 4 above will be as follows:

–         Preparation and submission of Notice of plan on closing Branch Office and documents relating to the dissolution of the Branch Office to the licensing authority shall be: 50,000,000 VND (Fifty million Vietnam Dong);

–         If you request us to support for finalizing tax obligations with the tax agency, we shall further charge for reviewing accounting documents regarding to operation of Branch Office:  6,000,000 VND (Six million Vietnam Dong) for each of month from commencing operation of Branch Office up to the date of review.

–         For review and prepare action plan for termination of employment contract with redundant employee, our fee shall be 40,000,000VND (Forty million Vietnam Dong).

–         Our fee for termination of employment contract with each redundant employee shall be at least 6,000,000VND (Six million Vietnam Dong).

4.2. Services fee shall be paid to SB Law as follows:

–               Within 03 working days from the date of signing the legal service contract, Client will pay for SB Law an advance payment which equivalent to 60% of the total estimated services fee.

–               Client willpay the remained fee and other cost and disbursement incurred on Client’s behalf within 03 working days from completion of Branch Office dissolution.

–                Client shall immediately notify SB Law of when actual payment(s) will be made on the amount specified in the invoice(s). SB Law will start working only upon receipt of payment of the respective invoice(s). Alternatively, SB Law reserves the right to withdraw the service if payment is not received 10 days after the date of the invoice. Further, in the event payments are not received by the payable date, SB Law reserves the right to suspend services and/or levy and collect a late payment fee of 0.5% per month up to the date of receipt of payment by SB Law.