Representative offices of foreign traders in Vietnam are prohibited from engaging in direct profit-making activities. So can a representative office retain ongoing legal counsel? The answer is YES — hiring lawyers for regular advice is not a direct profit-making activity.
1. Representative offices may hire the facilities needed for operations
Article 17.2 of the Commercial Law 2005 allows a representative office to hire or purchase the facilities and equipment necessary for its operations. Retaining ongoing legal counsel — compliance advice, contract review, support in dealings with state authorities — is a service supporting the lawful operations of the office and falls within this right.
2. Why hiring lawyers does not violate the ban on direct profit-making
Article 18.1 of the Commercial Law 2005 prohibits representative offices from engaging in direct profit-making activities — i.e. activities generating revenue or profit for the office. Hiring legal counsel is an operating expense, not a revenue-generating activity. Retaining ongoing counsel therefore does not violate the prohibition in Article 18.1.
3. Note on the signatory authority of the office head
Article 18.3 of the Commercial Law 2005 provides that the head of a representative office may only enter into contracts within the scope of the authorization granted by the foreign trader. Before signing an ongoing counsel retainer, the office head should therefore check whether the parent company’s authorization covers this authority — and if not, request a supplementary authorization.
On the organization and operation of representative offices, Decree 07/2016/ND-CP remains in effect (see Article 30) — the office and its parent company should consult it when signing and performing the counsel retainer.
FAQ
Can a representative office sign a services contract with a Vietnamese law firm?
Yes. But the office head may only sign within the scope of the foreign trader’s authorization (Article 18.3 of the Commercial Law 2005).
Does retaining legal counsel count as a “direct profit-making activity”?
No. It is an operating expense serving the office’s activities and generates no revenue — so it falls outside the Article 18.1 prohibition.
What should a representative office note on form and authority when retaining counsel?
The retainer should be in writing; the office head signs within the authorized scope; and its content should comply with the representative-office rules in the Commercial Law 2005 and Decree 07/2016/ND-CP.
References
- Commercial Law 2005: Article 17.2 (right to hire/purchase necessary facilities), Article 18.1 (ban on direct profit-making activities), Article 18.3 (office head signs contracts within the foreign trader’s authorization).
- Decree 07/2016/ND-CP: remains in effect (Article 30).
This article is for reference only and does not constitute legal advice. The content was drafted by AI and will be reviewed for quality by the AI Legal Council of FLAT Law Firm before approval for publication; it is not the legal opinion of a licensed human lawyer. Laws and regulations may change; please verify the current legal texts before applying them.
Does your representative office need ongoing legal advice? Contact FLAT Law Firm for support.
