While it is common in practice for the Chief Representative of a Representative Office (RO) to act on behalf of the RO in opening and using the RO's bank account, there are instances where the parent company may wish to authorize another person (Authorized Person) to handle these matters. The key question is the validity of such authorization and whether the Chief Representative's acknowledgment of such Power of Attorney (POA) should be sought.

Short answer: The authorization for the Authorized Person should originate from the RO, not the parent company. If the authorization is granted by the parent company, it should be recognized by the Chief Representative as the "legal representative" of the RO. This acknowledgment would then serve as a concurrent authorization by the RO.

This is because:

under Circular 23/2014 of the State Bank of Vietnam, the RO has the right to open bank accounts and is the account holder;
Article 3.3 and Article 4 of Circular 23/2014 provide that (i) the legal representative (người đại diện theo pháp luật) or an authorized representative (đại diện theo ủy quyền) of the account holder being an organization will perform transactions relating to the payment accounts within the scope of representation on behalf of such organization, and (ii) the account holder can also authorize another person to use its bank account subject to a written authorization;
therefore, authorization to another person such as the Authorized Person to open, operate, and close the RO’s bank account should come from the RO as the account holder (not the parent company);

In addition, although RO is not a legal entity, the Chief Representative should be considered as a “legal representative” of the RO and have the right to represent the RO to sign the above POA because:

under Article 33.1 of Decree 7/2016 guiding the commercial law, the Chief Representative is responsible to the foreign entity for his or her own activities and for those of the RO within the scope of authorization of the foreign entity;
the information of the Chief Representative is registered in the RO’s license; and
under Article 135 of the Civil Code 2015, a legal representative can be established through a decision of a competent authority, a legal entity's charter, or according to regulations. While this provision primarily addresses the legal representative of a legal entity, it can be analogously applied to argue that the Chief Representative also serves as the legal representative of the RO.

This post is written by Tran Duc Long and edited by Hoang Thi Thanh Thuy.

Vietnam Business Law