Question:
A foreign-invested enterprise has registered business line VSIC 4799 – Other retail sale not elsewhere classified, under Decision No. 27/2018/QD-TTg. However, the enterprise has not yet obtained a Business Licence for goods trading and activities directly related to goods trading as required by law. As a result, it has not commenced the registered retail business activities.
In this case, can the enterprise be subject to administrative penalties?
Answer:
Pursuant to Point a, Clause 1, Article 5 of Decree No. 09/2018/ND-CP, a foreign-invested economic organisation must obtain a Business Licence to exercise the right to retail goods, except for goods specified in Point c, Clause 4, Article 9 of the same Decree.
Based on the information currently available, the following matters should be considered:
- Requirement to Obtain a Business Licence for Retail Activities
Under Point a, Clause 1, Article 5 of Decree No. 09/2018/ND-CP, a foreign-invested economic organisation must obtain a Business Licence to exercise the right to retail goods, subject to the exceptions provided under the Decree.
Accordingly, where the enterprise intends to engage in retail distribution activities subject to licensing requirements, it must apply for and obtain the relevant Business Licence before commencing such activities.
Registration of a retail business line in the Enterprise Registration Certificate does not replace the requirement to obtain a Business Licence under the above regulations.
- Failure to Implement the Registered Retail Business Objectives
According to the information provided, the enterprise has registered retail business objectives but has not commenced the relevant activities because it has not yet obtained a Business Licence.
Where the retail business objectives are recorded in the Investment Registration Certificate, the failure to implement such objectives should be assessed in light of the registered investment project, its implementation schedule and the investor’s corresponding obligations.
Point a, Clause 2, Article 19 of Decree No. 122/2021/ND-CP provides for a fine ranging from VND 70,000,000 to VND 100,000,000 for failure to comply with the contents of the relevant investment policy approval documents, investor approval documents or Investment Registration Certificate, as specified in that provision.
Accordingly, if the enterprise fails to implement its investment project in accordance with the registered contents and the relevant conduct satisfies the legal elements of the applicable violation, it may be subject to administrative penalties. The applicability of such penalties must, however, be assessed based on the investment project documents, implementation schedule and specific circumstances of the case.
- Recommended Course of Action
To ensure that its legal registrations are consistent with its actual business plans, the enterprise should determine whether it intends to proceed with the retail activities.
- If the enterprise intends to proceed with the retail activities: It should review the applicable market access conditions, the categories of goods to be traded and the relevant licensing requirements. It should also apply for the required Business Licence and amend its investment and enterprise registration documents, where necessary.
- If the enterprise no longer intends to conduct the retail activities: It should consider amending the investment project objectives and relevant registration details to reflect its actual business plans. Such amendments do not automatically exempt the enterprise from liability for any violations that may have occurred before the amendments took effect.
- Conclusion
The enterprise should review both its obligation to obtain a Business Licence and the implementation status of its registered investment project objectives. If it intends to proceed with the retail activities, it must complete the required licensing procedures before commencing operations. If it no longer intends to pursue these activities, it should consider amending its investment and enterprise registration documents to align them with its actual business plans.
The enterprise should also separately assess its failure to implement the registered retail business objectives to determine its obligations and potential exposure to administrative penalties under the applicable laws.
