Branches involved in corporate mergers are matters of significant concern to enterprises. The article below outlines the legal regulations governing branches in corporate mergers and addresses several related issues in order to help individuals and organizations protect their lawful rights and interests.

I. Common mistakes relating to branches in corporate mergers

The common mistakes that enterprises often make regarding branches during corporate mergers include:

  • Failure to conduct due diligence on the legal status of branches: Enterprises fail to thoroughly review the legal status, bad debts, or existing disputes of individual branches during the merger process.
  • Failure to complete procedures for branch termination and tax finalization/transfer of obligations: Enterprises fail to implement branch termination procedures with the business registration authority upon merger, or fail to complete tax finalization procedures with the local tax authority where the branch is located before the merger.
  • Failure to register changes relating to branches after the merger: Enterprises fail to implement or delay implementing procedures for branch operation registration with the competent authority after the merger. They may also fail to notify partners, customers, employees, and related parties regarding changes to branch addresses.

II. Understanding branches in corporate mergers

1. What is a branch in a corporate merger and how does it differ from an ordinary branch?

- Pursuant to Clause 1, Article 44 of the Law on Enterprise 2020 (amended in 2025), a branch is a dependent unit of an enterprise that is assigned to perform all or part of the enterprise’s functions, including representative functions under authorization. The business lines of the branch must be consistent with those of the enterprise.

- Pursuant to Clause 1, Article 201 of the Law on Enterprise 2020 (amended in 2025), a corporate merger refers to the process whereby one or several companies (hereinafter referred to as the “merged companies”) may merge into another company (hereinafter referred to as the “acquiring company”) by transferring all assets, rights, obligations, and lawful interests to the acquiring company, while simultaneously terminating the existence of the merged companies.

Accordingly, branches in corporate mergers may be understood as dependent units of the merged company that must cease operations, after which the acquiring company will implement re-registration procedures following the merger.

- From a legal perspective, a branch after a merger remains a dependent unit of the enterprise. However, compared with an ordinarily established branch, a branch in a corporate merger has fundamental differences in terms of asset origin, legal obligations, and succession. Specifically:

Legal succession responsibilities

  • Branches in corporate mergers: Taking legal responsibility for debts, contracts, and employee rights inherited from the merged company under Point c, Clause 2, Article 201 of the Law on Enterprise 2020, as guided by Article 67 of Decree No. 168/2025/ND-CP.
  • Ordinary branches: Performing all or part of the enterprise’s functions, including representative functions under authorization pursuant to Clause 1, Article 44 of the Law on Enterprise 2020 (amended in 2025).

Branch operation registration

  • Ordinary branches: It is established under the decision of the enterprise and implements branch operation registration procedures with the business registration authority pursuant to Article 45 of the Law on Enterprise 2020 (amended in 2025).
  • Branches in corporate mergers: If the acquiring enterprise wishes to establish branches or transfer information and legal obligations relating to the branches of the merged enterprise, it must implement procedures for tax finalization, transfer of tax obligations, amendment of the Certificate of Branch Operation Registration with the competent authority, or termination of operations of the branches of the merged enterprise. Thereafter, the enterprise must register the establishment of branches of the post-merger enterprise under Clause 3, Article 67 of Decree No. 168/2025/ND-CP.

2. What basic information must be identified when referring to branches in corporate mergers?

In corporate merger activities, correctly identifying the basic information of enterprise branches is an important step in assessing risks and actual value. Specifically:

  • Legal information of the branch: Certificate of Branch Operation Registration; tax status and financial obligations to tax authorities; business licenses and sub-licenses applicable to conditional business sectors of the branch.
  • Assets and debt obligations: Review of fixed assets (factories, machinery, equipment), land use rights or lease agreements, economic contracts entered into by the branch, and outstanding liabilities.
  • Financial and tax information: Tax debt status, tax obligations with local tax authorities, detailed financial statements, and the branch’s separate revenue/cost situation.

3. Which enterprise takes the rights and obligations of branches in corporate mergers after the merger?

Pursuant to Point c, Clause 2, Article 201 of the Law on Enterprise 2020, as guided by Article 67 of Decree No. 168/2025/ND-CP, after the acquiring company completes enterprise registration, the merged company ceases to exist. The acquiring company enjoys the lawful rights and interests and assumes responsibility for all obligations, unpaid debts, labor contracts, and other property obligations of the merged company. The acquiring company automatically inherits all lawful rights, obligations, and interests of the merged companies under the merger agreement.

Accordingly, the rights and obligations relating to branches in corporate mergers belong to the acquiring enterprise after the merger.

4. Are branches in corporate mergers required to re-register specialized sub-licenses?

The acquiring companies automatically inherit all lawful rights, obligations, and interests of the merged companies under the merger agreement under Point c, Clause 2, Article 201 of the Law on Enterprise 2020, as guided by Article 67 of Decree No. 168/2025/ND-CP.

Accordingly, enterprises must implement procedures for amendment or reissuance of sub-licenses if the merger results in changes to the following contents:

  • Entity named on the license: If the previous license was issued to the merged company (which has ceased to exist), the acquiring company must implement procedures to transfer the license into the acquiring company’s name.
  • Business address: If the merger is accompanied by a change in the branch’s operating address, the sub-license must be reissued as such licenses are generally associated with physical conditions at a specific address.
  • Branch manager: If specialized regulations require the branch manager to possess a specific practicing certificate and such personnel changes after the merger.
  • Cases where re-registration is not mandatory as the acquiring company inherits the branch without changes: Certain licenses may retain their validity if no information stated therein changes (for example, where a branch of the acquiring company takes over the old branch without changes to its name or address).

III. Legal regulations relating to branches in corporate mergers

1. Are there specific legal instruments governing branches in corporate mergers that enterprises should be aware of?

The legal instruments governing branches in corporate mergers that enterprises should note include:

  • The Law on Enterprise 2020 (amended in 2025): Regulating merger procedures, legal responsibilities, and termination of the merged company’s existence. Specifically, Article 201 governs corporate merger procedures, while Clause 1, Article 44 regulates enterprise branches.
  • Decree No. 168/2025/ND-CP: Providing detailed guidance on procedures for branch operation registration. Specifically, Clause 1, Article 30 of this Decree regulates dossiers, sequence, and procedures for enterprise branch operation registration.

2. What steps must be taken to notify the business registration authority regarding branches in corporate mergers?

When implementing a corporate merger, the branches of the merged enterprise may either remain in operation with amended branch information/address or terminate operations according to the acquiring company’s decision.

- Cases of branch termination

Pursuant to Point c, Clause 2, Article 201 of the Law on Enterprise 2020, as guided by Article 67 of Decree No. 168/2025/ND-CP:

  • The acquiring company completes enterprise registration procedures.
  • After the acquiring company is granted enterprise registration, the provincial business registration authority changes the legal status of the merged company to “undergoing merger procedures” and changes the branch status to “undergoing termination procedures”. The provincial business registration authority sends information to the tax authority. The tax authority is responsible for notifying the provincial business registration authority that the branch has completed tax finalization and transfer of tax obligations.
  • Within 03 working days from the date of receiving information from the tax authority confirming that the branch of the merged enterprise has completed tax finalization and transfer of tax obligations, the provincial business registration authority shall terminate the existence of the enterprise and the branch’s operation in the National Enterprise Registration Database.
  • Before the merged enterprise ceases to exist, all branches of the merged enterprise must terminate operations.

- Cases where branch operations continue but registration information changes

Where the acquiring enterprise does not terminate branch operations but changes branch registration information or addresses, procedures shall be carried out in accordance with Article 56 of Circular No. 168/2025/ND-CP as follows:

  • Where branch operation registration information changes, the enterprise must implement procedures for registration of such changes with the provincial business registration authority where the branch is located within 10 days from the date of the change.
  • Where the branch address changes, the enterprise must submit the registration dossier for changes to the provincial business registration authority where the branch is intended to be relocated.
  • Where the branch address change results in a change of the tax authority managing the taxpayer, the enterprise must complete tax procedures relating to relocation with the tax authority before registering the branch address change with the provincial business registration authority.
  • The dossier for registration of changes includes an application for registration of changes to branch operation registration information.
  • Upon receipt of the enterprise’s registration dossier, the provincial business registration authority shall issue a receipt and appointment schedule for returning results to the applicant. Within 03 working days from receipt of the dossier, the authority shall review the validity of the dossier and issue the Certificate of Branch Operation Registration or Confirmation of Changes to Branch Operation Registration Information if requested by the enterprise. If the dossier is invalid, the authority shall issue a written notice specifying the contents requiring amendment. 

3. What common acts are considered violations relating to branches in corporate mergers?

Common acts considered violations relating to branches in corporate mergers include:

  • Late branch termination procedures: When the merged enterprise ceases to exist, its dependent branches must also complete branch termination procedures. Failure to submit branch termination notices to the business registration authority within the prescribed timeline constitutes a violation.
  • Failure to fulfill tax obligations: Branches of the merged party must fulfill all tax obligations before terminating operations. Concealing tax debts or failing to finalize taxes with the local tax authority where the branch is headquartered constitutes a serious violation.
  • Failure to register changes to branch operation registration information: Failure to register, or late registration of, changes to branch operation registration information or changes to branch addresses resulting in changes to the tax authority managing the taxpayer.

IV. Questions related to branches in corporate mergers

1. When a branch involved in a corporate merger operates in another province, what should be noted regarding taxes, fees, and local procedures?

In the case that the branch of the merged company continues its operations and changes the branch address after the merger, the enterprise must register amendments to the branch operation registration contents under Clauses 2 and 3 Article 56 of Decree No. 168/2025/ND-CP, specifically:

  • In case of changing the branch address, the enterprise shall submit the application dossier for registration of changes to the provincial business registration authority where the branch, representative office, or business location is intended to be relocated.
  • If the change of branch or representative office address results in a change of the tax authority managing the taxpayer, the enterprise must complete procedures with the tax authority relating to the relocation in accordance with tax regulations before registering the address change with the provincial business registration authority.

2. How will failure to notify or false declaration of information regarding a branch involved in a corporate merger be handled?

According to Points b and c, Clause 1 and Clause 2, Article 54 of Decree No. 122/2021/ND-CP, a fine ranging from 20,000,000 VND to 30,000,000 VND shall be imposed for one of the following acts:

  • Terminating branch operations without notifying the business registration authority;
  • Relocating a branch headquarters to another province or centrally governed city different from the registered location without notifying the business registration authority where the branch or representative office is relocated.

Remedial measure: Mandatory notification to the business registration authority for the above-mentioned violations.

3. How will a branch involved in a corporate merger be handled if it uses fake invoices/documents or prepares fictitious invoices for tax evasion purposes?

A branch involved in a corporate merger that uses fake invoices/documents or prepares fictitious invoices for tax evasion purposes may be subject to the following sanctions depending on the severity of the violation:

- Administrative fines: Pursuant to Clause 1 Article 28 of Decree No. 125/2020/ND-CP, a fine ranging from 20,000,000 VND to 50,000,000 VND shall be imposed for acts of illegal use of invoices as prescribed in Article 4 of this Decree, except for the cases specified in Point d, Clause 1, Article 16 and Point d, Clause 1, Article 17 thereof.

- Criminal liability: If individuals or organizations use fictitious invoices for tax evasion purposes, they may be prosecuted for the crime of tax evasion under Article 200 of the Criminal Code 2015 (as amended by Clause 47 Article 1 of the amended Criminal Code 2017). Accordingly, issuing fictitious invoices for tax evasion purposes may result in imprisonment of up to seven years along with corresponding sanctions.

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