In order to understand more this type of document, Phong & Partners would like to provide You with the content about the Sub-License and Regulations related to Sub-License.
- Legal grounds
a. Article 7.1, 7.2, 7.6 of Law on Investment 2020
Article 7. Conditional business lines
1. Conditional business lines are the business lines in which the business investment must satisfy certain requirements for reasons of national defense and security, social order and security, social ethics, or public health.
2. The list of conditional business lines is specified in Appendix IV to this Law.
6. Business investment conditions are applied in the following forms:
a) Licenses;
b) Certificates;
c) Credentials;
d) Written confirmation or written approval;
đ)Other requirements that must be satisfied by individuals and business organizations to conduct business investment activities without obtaining written confirmation from a competent authority.
b. Article 8.1 of Law on Enterprises 2020
Article 8. Obligations of enterprises
1. Maintain the fulfillment of conditions for conducting restricted business lines and business lines restricted to foreign investors prescribed by law throughout the course of business operation.
2.What is a “Sub-License”? What are characteristics and form of “Sub-License”?
- What is a “Sub-License”?
- When registering to establish a business, enterprises are entitled to choose to trade in industries that are not prohibited by law. However, in the system of business lines, some professions require to meet certain requirements. According to Article 7.1 of Law on Investment 2020, conditional business lines are the business lines in which the business investment must satisfy certain requirements (legal capital; production and business establishments; practice diploma; origin; order and safety…) to ensure the protection of national defense, security, social order and safety, social ethics and public health of the community.
- In order to certify enterprises/individuals that meet full requirements, competent state agencies will grant them corresponding certificates – the enterprises community often uses an easy phrase to understand which is “Sub-License”.
b. Characteristics of Sub-License
“Sub-License” has the same nature as the Enterprise Registration Certificate but has many specific characteristics, specifically:
- This document is granted to enterprises or individuals when doing business in conditional business lines. For an enterprise, Sub-License is granted after granting of Enterprise Registration Certificate; for an individual, Sub-License is granted after that individual completes an academic level (university, college…).
- Sub-License forces enterprises to fully meet the requirements for each line of business as prescribed by law (legal capital, facilities, practicing certificate…).
- Sub-License usually has a specific using term.
c. Forms of Sub-License
According to Article 7.6 Law on Investment 2020, “Sub-License” is granted in the following forms:
- Licenses: License for marketing authorization, License for transportation business…
- Certificates: Certificate of food safety conditions, Certificate of eligibility for security and order, …
- Requirements for practice Credentials: Certificate of Real estate brokerage practice, certificate of accounting practice,...
- Requirements for certification of professional liability guarantee: Compulsory professional liability insurance for lawyers, notaries,...
- Requirements for written confirmation: Certificate of legal disclosure...
- Other requirements that individuals, economic organizations must meet in order to carry out business investment activities without written confirmation by the competent authority.
3.When to apply for Sub-License?
- According to Article 8.1 Law on Enterprise 2020, an enterprise is obligated to fully satisfy the business investment conditions when doing business in conditional business lines which are listed specifically in the list attached to Appendix IV of Law on Investment.
- Thus, individuals, organizations that register for business lines in Appendix IV of Law on Investment 2020 are required to carry out procedures for applying for “Sub-License” corresponding to that line. In case the license expires, it must be renewed or newly issued. If individuals, organizations do business in industries other than Appendix IV of Law on Investment 2020, it is not required to apply for “Sub-License, however, it is still needed to meet the conditions, general principles when doing business.
4.Some common types of sub-licenses
- Depending on each business line, the law will regulate one or several types of separate Sub-License. Some types of Sub-Licenses correspond to the current popular conditional business lines, such as:
- The role and meaning of Sub-License for enterprises
- Sub-License certifies that the enterprise has met all the requirements of business activities as well as the permission of the competent state agencies when doing business in conditional business lines.
- Sub-License also plays an important role in the valuation of enterprise values in activities related to mergers acquisitions and capital investments. The specific sub-licenses (enterprises must meet strict business conditions, cumbersome and complicated implementation procedures) will make the value of an enterprise more enhanced.
The above is our advice about “Sub-License and related regulations”. If You would to understand more clearly and specifically, You can send an email, phone, or go to the office to be consulted by our lawyer team.
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