What is a sub-license? What business lines need a sub-license?

1. What is a sub-license?

Sub-license can be understood as a legal document issued to an individual or organization to certify that they are qualified to do one or several conditional business lines.
According to Article 7.1 Law on Investment 2020, conditional business lines are the business lines in which the business investment must satisfy certain conditions for reasons of national defense and security, social order and security, social ethics, or public health.
Sub-license is similar in nature to an Enterprise Registration Certificate but has many other features, specifically:

• Is a document issued to enterprises with conditional business lines and usually issued after the Enterprise Registration Certificate.

• Conditions for being granted a sub-license also satisfy all conditions for each business line as prescribed by law (legal capital, facility, practicing certificate, etc.)

• Usually has an effective dates. When expires, the enterprise must apply for an extension of the sub-license or apply for a new one if they want to continue conducting that business lines.

Certificate of satisfaction of food safety conditions

2. The role of the sub-license

Ensure compliance with the Constitution and laws. From the perspective of a State agency that manages and implement licensing procedure: on behalf of the State, supervises business performance of enterprises through the initial activity of granting sub-licenses. From the market perspective, a sub-license is a guarantee of the enterprise's production and business conditions and has been appraised and licensed by the State agency. 

The current sub-licensing still has some difficulties:

• The law stipulates many types of sub-licenses, the regulations are scattered and unsystematic, making it difficult to fully grasp the legal provisions of enterprises.

• Joining the Free Trade Agreements, Vietnam is increasingly integrate, thereby forming many new business lines, requiring the law to be reformed, so there are types of businesses that are regulated by unclear or rather strict conditions in law, causing difficulties for both State agencies and Enterprises.

• The sub-licensing procedure is relatively complicated, the management hierarchy and licensing authority need to be more clearly, creating conditions for businesses to implement, avoiding the feeling of “fear” of contact State agencies of enterprises just to carry out 1 simple procedure.

3. When to apply for a sub-license?

According to Article 8.1 Law on Enterprises 2020, enterprises have the obligation to maintain the fulfillment of conditions for conducting restricted business lines and business lines restricted to foreign investors.
According to Article 89.2 Decree 01/2021/ND-CP, a household business are entitled to engage in conditional business lines from the day on which all business conditions are fulfilled and must maintain the fulfillment of such conditions throughout its operation. 
Thus, individuals and organizations (household businesses, enterprises, cooperatives) when registering business lines in Appendix IV of the Law on Investment 2020 must apply for a sub-license of that industry or profession and must extend or renew the sub-license.
If individuals or organizations operate business in other industries and professions than Appendix IV of the Law on Investment 2020, it is not necessary to apply for a sub-license.

License to operate a language center

4. List of conditional business lines need a sub-license

According to Appendix IV of the Law on Investment 2020, there are 227 conditional business lines. These are some of the prominent conditional business lines need to apply for a sub-license before conducting business to avoid unfortunate penalties for businesses.

• Production of seal
• Fire safety and firefighting services
• Accounting services.
• Tax agency services.
• Auditing services.
• Employment agency services.
• Operation of continuing education institutions
• Overseas study consultancy services.
• Pharmaceutical production
• Medical examination and treatment services.