Representative offices in corporate mergers are an important issue that enterprises often underestimate during the restructuring process. A proper understanding of their nature, functions, and relevant legal regulations will help enterprises minimize risks and operate more effectively after the merger. The following article provides a comprehensive overview, from fundamental concepts to practical legal issues.

I. Overview of issues related to representative offices in corporate mergers

Representative offices in corporate mergers are an important matter arising when enterprises undergo restructuring through merger activities. The maintenance, amendment, or termination of operations of representative offices must be implemented in compliance with legal regulations in order to ensure continuity and legality in the enterprise’s post-merger operations.

Representative offices in corporate mergers are characterized by the fact that they do not directly perform business functions, but mainly undertake representative, liaison, and promotion activities. Therefore, enterprises should clearly define the role, scope of operation, and authority of the head of the representative office to avoid acts beyond authorized powers that may lead to legal risks.

II. Understanding representative offices in corporate mergers

1. What is a representative office in a corporate merger, and how does it differ from a transaction office or branch?

A representative office in a corporate merger is a dependent unit of an enterprise established or maintained after the merger process, having the function of acting as an authorized representative, performing liaison activities, conducting trade promotion, and protecting the interests of the enterprise. Unlike business units, a representative office does not have the function of directly generating revenue and is not permitted to conduct profit-generating business activities under Clause 2, Article 44 of the Law on Enterprise 2020, as amended and supplemented in 2025.

Compared to a transaction office or branch, a representative office differs significantly in terms of operational scope and legal nature. A branch is permitted to perform all or part of the enterprise’s business functions, may enter into contracts, and generate revenue. A transaction office (commonly found in the banking or credit institution sector) also provides services directly to customers. Meanwhile, a representative office merely acts as a liaison unit and may not independently conduct business activities or execute contracts unless duly authorized.

2. What are the primary functions of a representative office in the operations of an enterprise after a merger?

A representative office in a corporate merger is a dependent unit of the enterprise whose primary function is to act as an authorized representative for and protect the interests of the enterprise. It serves as a presence that helps the enterprise maintain connections with partners, customers, and regulatory authorities after the merger process.

In addition, the representative office also undertakes tasks such as collecting market information, supporting the promotion of the enterprise’s image and brand, and fostering business cooperation opportunities. However, it should be noted that a representative office does not have the function of directly conducting profit-generating business activities (Clause 2, Article 44 of the Law on Enterprise 2020, as amended and supplemented in 2025).

3. When should an enterprise establish a representative office in a corporate merger instead of a branch?

An enterprise should establish a representative office in a corporate merger instead of a branch when its primary objective is to maintain a presence, connections, and support activities after the merger, rather than directly conducting business operations. Where the enterprise only requires a focal point for transactions, trade promotion, customer care, or liaison with local regulatory authorities, a representative office is a more suitable option with fewer legal obligations.

In addition, when the enterprise wishes to reduce operating costs and simplify administrative procedures, establishing a representative office is generally more advantageous than establishing a branch. A representative office is not required to perform complex accounting and tax declaration obligations applicable to business units, making it suitable during the post-merger organizational stabilization phase.

Conversely, if the enterprise intends to conduct business operations, execute contracts, and directly generate revenue in a new locality, it should establish a branch instead of a representative office to ensure compliance with the appropriate legal functions.

4. How is the authority of the head of a representative office in a corporate merger regulated?

Pursuant to Clause 2, Article 44 of the Law on Enterprise 2020, a representative office is a dependent unit of the enterprise tasked with acting as an authorized representative and protecting the enterprise’s interests, without conducting business activities. Therefore, the head of the representative office may only exercise powers within the representative scope, such as conducting transactions, handling liaison work, and conducting trade promotion activities.

Regarding specific authority, the powers of the head of the representative office mainly arise from the authorization relationship under Articles 138 and 562 of the Civil Code 2015. Accordingly, such a person may act on behalf of the enterprise in certain transactions if lawfully authorized in writing. If they exceed the scope of authorization, the transaction may not create rights and obligations for the enterprise unless subsequently ratified by the enterprise.

III. Legal regulations related to representative offices in corporate mergers

1. What documents must be submitted for the registration of a representative office in a corporate merger, and to which authority?

Pursuant to Clause 1, Article 30 of Decree No. 168/2025/ND-CP, within 10 days from the date of the decision on the establishment of a representative office in a domestic corporate merger, the enterprise must submit the registration dossier for the representative office to the provincial-level business registration authority where the representative office is located. The dossier includes the documents prescribed in Clause 2, Article 45 of the Law on Enterprise 2020, as amended and supplemented in 2025, including:

  • Notice of establishment of the representative office;
  • Copy of the decision on establishment and copy of the meeting minutes regarding the establishment of the representative office of the enterprise:
    + Copy of the decision and copy of the meeting minutes of the Members’ Council for multi-member limited liability companies and partnerships;
    + Copy of the decision and copy of the meeting minutes of the Board of Directors for joint stock companies;
    + Copy of the decision of the company owner for single-member limited liability companies.

In cases where the personal identification number of the head of the branch or representative office is declared in accordance with Clause 1, Article 11 of this Decree, the registration dossier for branch or representative office operations is not required to include copies of the legal documents of the individual serving as the head of the branch or representative office.

2. How does labor law regulate the transfer and continuation of employment contracts when employees are transferred to a representative office in a corporate merger?

Under the Labor Code 2019, when a corporate merger occurs, employment relationships are not automatically terminated but may continue to be inherited by the succeeding employer. Specifically, Article 43 of the Labor Code 2019 provides that where the merger of representative offices affects the employment of multiple employees, the employer must formulate a labor utilization plan in accordance with Article 44 of the Labor Code.

Where employees are transferred to work at a representative office after the merger, their benefits regarding salary, contract term, insurance regimes, and other entitlements must remain unchanged. However, if the transfer to the representative office results in amendments to the employment contract (such as changes in workplace or job title), Article 33 of the Labor Code requires that such amendments must be agreed upon by the employee.

3. How may common violations relating to the operation of representative offices in corporate mergers, particularly failure to register with competent state authorities, be handled?

Specifically, pursuant to Clause 5, Article 44 of Decree No. 122/2021/ND-CP, the failure to register the operation of a representative office upon changes arising after a merger may result in administrative fines ranging from 20,000,000 VND to 30,000,000 VND. In addition, the enterprise may be compelled to implement supplementary registration procedures in accordance with regulations. Furthermore, if a representative office has not been duly registered but still conducts transactions or enters into contracts, such transactions may be deemed legally invalid or give rise to disputes and risks for the enterprise.

Failure to register a representative office is a common violation that entails significant legal and financial risks. Therefore, enterprises should fully comply with registration procedures to ensure lawful and stable operations.

IV. Questions relating to representative offices in corporate mergers

1. How must a representative office in a corporate merger declare and pay taxes under tax laws?

In principle, a representative office in a corporate merger is not considered a business entity; therefore, its tax obligations are determined based on its actual functions. Under normal circumstances, where the representative office does not conduct business activities or generate revenue, it is not required to declare or pay value-added tax (“VAT”) and corporate income tax (“CIT”). However, where the representative office pays income to employees, it is still required to withhold, declare, and pay personal income tax (“PIT”) in accordance with regulations.

Representative offices in corporate mergers are generally not subject to revenue-based taxes, but they are still required to fulfill tax obligations relating to employees and comply with declaration requirements when financial obligations arise.

2. Upon termination of operations, how must an enterprise notify and carry out procedures for closing a representative office in a corporate merger?

Pursuant to Clause 2, Article 66 of Decree No. 168/2025/ND-CP regarding the termination of operations of branches, representative offices, and business locations, upon termination of operations, the enterprise must notify and implement procedures for closing the representative office in a corporate merger as follows:

  • Within 10 days from the date of the decision to terminate the operation of the representative office, the enterprise must submit the dossier for registration of termination of operation of the representative office to the provincial-level business registration authority where the representative office is located.

The enterprise must fully perform its financial and labor obligations and notify the competent authorities in order to ensure that the closure of the representative office is conducted lawfully and to avoid legal risks.

3. In the case of a corporate merger, how should procedures relating to the transfer of seals and documents of the representative office be implemented? 

When the merged enterprise ceases to exist, its affiliated representative office must also terminate its operations. Accordingly, the enterprise must implement the termination procedures in accordance with the regulations mentioned above. Pursuant to Clauses 2 and 3, Article 43 of the Law on Enterprise 2020, as amended and supplemented in 2025, enterprises are entitled to decide on the management and use of seals. Upon termination of operation, the seal must not be transferred but instead must be destroyed or otherwise handled in accordance with the enterprise’s internal regulations.

Accordingly, in a corporate merger, the documents of the representative office shall be transferred to the acquiring enterprise, while the seal must be handled separately and not transferred. At the same time, the representative office must implement procedures for termination of operation in accordance with legal regulations.

4. How are violations of employees’ rights commonly handled when employees are transferred to a representative office in a corporate merger?

Where an enterprise violates employees’ rights when transferring employees to a representative office in a corporate merger, administrative sanctions may be imposed, for example:

  • For acts of assigning work inconsistent with the employment contract or unlawfully transferring employees, fines ranging from 3,000,000 VND to 7,000,000 VND may be imposed under Clause 2, Article 11 of Decree No. 12/2022/ND-CP.
  • For acts where the merger of a representative office results in termination of employment contracts with employees without complying with the provisions prescribed under Clause 2, Article 12 of Decree No. 12/2022/ND-CP, fines of up to 20,000,000 VND may be imposed together with remedial measures.

In addition to administrative liability, the enterprise may also face complaints or lawsuits from employees seeking compensation for damages.

5. What are the common legal consequences when a representative office in a corporate merger conducts business activities beyond its authority?

When a representative office after a merger conducts business activities beyond its authority, legal consequences may arise for both the enterprise and the related transactions.

  • First, pursuant to Clause 2, Article 44 of the Law on Enterprise 2020, as amended and supplemented in 2025, a representative office only has representative functions and is not permitted to directly conduct business activities. Therefore, if it enters into or performs business transactions, such transactions may be deemed beyond the scope of representative authority, resulting in risks of invalidity or non-binding effect on the enterprise.
  • If damage is caused to partners or third parties, the enterprise may still take civil liability because the representative office is a dependent unit of the enterprise. At the same time, the individual performing acts beyond authorized powers may also be jointly liable for compensation under Clause 4, Article 143 of the Civil Code 2015 regarding unauthorized representation.

V. Are you looking for a reputable legal expert to assist with issues relating to representative offices in corporate mergers?

If you require in-depth assistance regarding legal matters related to representative offices in corporate mergers, NPLaw is a reliable option worth considering. With extensive experience in corporate and restructuring matters, the lawyers at NPLaw are capable of providing consultation, handling procedures, and accompanying enterprises to ensure legal compliance and minimize risks throughout the implementation process.

Representative offices in corporate mergers play an important role in maintaining operations and connections after restructuring; however, they also involve numerous legal risks if enterprises fail to comply with applicable regulations. Enterprises should clearly understand the operational scope, authority, and legal obligations of representative offices in order to avoid violations and ensure stable operations. Proper implementation of registration, labor, tax, and termination procedures will help minimize disputes and additional costs.

The above information is for reference purposes only. Should clients require consultation on specific cases, please contact NPLaw for prompt legal assistance.