Establishment a construction foreign capital company in Vietnam

Currently, the demand for construction services in Vietnam is very popular because in recent years, the real estate market has progressed quite well, especially in big cities such as Ho Chi Minh City, Hanoi, Binh Duong, Da Nang… Many foreign capital construction companies have achieved a lot of success and built a reputation in Vietnam due to their high level of expertise and effective solutions in the construction process as well as the completion of works.

Currently, restrictions on foreign investment in the field of construction work have disappeared; At the same time, the market demand is still very large, so this is a golden opportunity for foreign investors wishing to establish a  foreign capital construction company in Vietnam. In order to help you more conveniently learn and prepare,  Viet An Law Firm would like to summarize and provide some information as follows:

Legal bases

• Vietnam’s specific commitments on services at the WTO;
• Investment Law 2020;
• Enterprise Law 2020;
• The 2014 Construction Law and the 2020 Amended Construction Law
• Decree 15/2021/ND-CP details a number of contents on management of construction investment projects;

According to the provisions of the Schedule of specific commitments on services of Vietnam at the WTO, construction services include:

• Construction of high-rise buildings (CPC 512);
• Construction of civil engineering works (CPC 513);
• Installation completion work (CPC 514,516);
• Completion of high-rise buildings (CPC 517);
• Other construction works (CPC 511, 515, 518).

According to Clause 21 Article 3 of the 2014 Law on Construction, construction activities include: “formulation of construction planning, formulation of construction investment projects, construction survey, construction design, construction, construction supervision, project management, selection of contractors, acceptance and handover of works into operation,  warranty, maintenance of construction works and other activities related to the construction of works.”.

Currently, Vietnamese law as well as the Schedule of commitments are no longer binding on the form of investment or contributed capital with foreign investors. Foreign investors may establish a construction company with foreign capital in Vietnam to provide construction services with a capital ownership rate of up to 100% of charter capital. However, to invest in this field the investor must be a legal entity.

There are two methods of implementing investment procedures as follows

• Establishment of foreign capital economic organizations in Vietnam;
• Capital contribution, purchase of shares, capital contribution of economic organizations.

Option 1: Establish a foreign capital construction company in Vietnam

Step 1: Investors apply for an Investment Registration Certificate in Vietnam

The dossier includes:

• A written request for implementation of an investment project;
• Documents on the legal status of the investor: a copy of the identity card or identity card or passport (if an individual); a copy of the certificate of incorporation or equivalent document and the passport of the capital manager (if it is an organization);
• An investment project proposal includes the following contents: investors implementing the project, objectives, scale and investment capital, capital mobilization plan, location, duration, investment progress, labor demand, proposal for investment incentives, impact assessment, socio-economic efficiency of the project;
• Documents proving the financial capacity of the investor include at least one of the following documents: financial statements of the last 02 years of the investor; commitment to financial support of the parent company; commitment to financial support of the financial institution; guarantee on the financial capacity of the investor; other documents proving the financial capacity of the investor;
• An investment project proposal includes the following principal contents: investor or investor selection form, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, implementation progress, information on the current status of land use at the project site and land use demand proposal (if any), demand for labor, proposal for investment incentives, impacts, socio-economic efficiency of the project, preliminary environmental impact assessment (if any) in accordance with the law on environmental protection.

Where the law on construction provides for the preparation of a pre-feasibility study report, the investor may submit the pre-feasibility study report instead of the investment project proposal;

• In case the investment project does not request the State to allocate land, lease land, permit change of land use purpose, submit copies of land use right papers or other documents determining the right to use the location for the implementation of the investment project;
• Contents of explanation of technologies used in investment projects, for projects subject to appraisal and collection of opinions on technologies in accordance with the law on technology transfer;
• Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any);
• Power of attorney for Viet An Law.

Place of application: Department of Planning and Investment where the head office is expected to be located.

Order of processing: Within 15 days from the date of receipt of a complete and valid dossier, the Department of Planning and Investment will issue an Investment Registration Certificate to the foreign investor. In case of refusal to grant a grant, the Department of Planning and Investment will reply in writing clearly stating the reason.

Step 2: Establish a foreign capital construction company in Vietnam

Company establishment procedures and documents

• Application for registration of the enterprise;
• The company’s charter;
• List of founding shareholders and shareholders being foreign investors (if they are joint-stock companies); List of members (if it is a two-member limited liability company);
• Certified copy of identity card or citizen identification card or passport (if an individual); establishment decision, enterprise registration certificate or equivalent document and citizen identity card or identity card or passport with written authorization for the capital manager in Vietnam (if it is an organization);
• A certified copy of the granted Investment Registration Certificate;
• Power of attorney for Viet An Law Firm;

Place of application: Department of Planning and Investment where the enterprise is headquartered.

Duration: 03 – 06 working days.

Disclosure of contents of business registration information

• After being granted the Certificate of Business Registration, an enterprise must publicly announce it on the National Business Registration Portal and pay fees as prescribed by law. The contents of the announcement include the contents of the Certificate of Business Registration and the following information:
  • Business lines;
  • List of founding shareholders; list of shareholders being foreign investors, for joint-stock companies (if any).
• Publication fee: The request for publication of enterprise registration contents and payment of fees for disclosure of enterprise registration contents shall be made at the time the enterprise submits the enterprise registration dossier. In case an enterprise is not granted enterprise registration, the enterprise will be refunded the fee for announcing enterprise registration contents.

The announced fee is VND 100,000 as prescribed in Circular 47/2019/TT-BCT.

Mark of the business

• A seal includes a seal made at a seal engraving establishment or a seal in the form of a digital signature in accordance with the law on e-transactions.
• The enterprise decides on the type of seal, quantity, form and content of the seal of the enterprise, branches, representative offices and other units of the enterprise.
• The management and retention of the seal shall comply with the provisions of the company’s charter or regulations promulgated by the enterprise, branch, representative office or other unit of the enterprise bearing the seal. Enterprises use seals in transactions in accordance with the provisions of law.

Step 3: Issue the Certificate of Competence of the construction organization

A dossier of application for a Certificate of Competence of a construction organization includes:

• Application for certificate of competence (drafted by Viet An)
• Notarized copy of the business registration certificate or decision on establishment of the organization (Customer provided).
• The certificate of competence has been issued by the competent authority in case of request for adjustment of the class of competency certificate: certified copy (provided by the Customer).
• A list of relevant key individuals, employees and technical workers and declaration of experience in construction activities of the organization together with diplomas, certificates and labor contracts of key individuals and technical workers related to the contents of the application for certificates of competence (drafted by Viet An customers); Enclose the preparation of 01 notarized copy (university degree and certificate: notarized copy attached);
• Contract and Minutes of acceptance of work performed according to the declared contents (for construction survey organizations, construction planning design, design, construction design verification, construction investment project management consultancy, Grade I construction supervision consultancy, Class II);
• Contract; Minutes of acceptance and acceptance of completion of construction of work items, construction works or work parts (in case of specialized construction work) made according to the declared contents (for Grade I and Grade II construction organizations);

Where to apply:

• Ministry of Construction: for Grade I certificate;
• Department of Construction: for Grade II certificate.

Option 2: Capital contribution, share purchase, contributed capital in a Vietnamese construction company

Carrying out investment procedures in this way helps investors save time, effort and costs by not having to apply for an Investment Registration Certificate but only need to register for capital contribution, purchase of shares and contributed capital in a Vietnamese construction company. When receiving approval for capital contribution, share purchase or capital contribution from the Department of Planning and Investment, it is only necessary to carry out procedures for changing shareholders or members. In addition, the Vietnamese construction company already has the Certificate of Competence of the construction organization. Only when foreign investors want to implement larger projects, it is necessary to carry out procedures for re-issuance of this certificate to suit business activities.

Step 1: Foreign investors register for capital contribution, purchase of shares, capital contribution to economic organizations

Dossier of foreign investors purchasing contributed capital

• A document of registration of capital contribution, share purchase or purchase of contributed capital includes the following contents: information on enterprise registration of economic organizations to which foreign investors plan to contribute capital, purchase shares or purchase contributed capital; business lines; list of owners, members, founding shareholders, list of owners, members, shareholders being foreign investors (if any); the percentage of ownership of charter capital of foreign investors before and after capital contribution, share purchase or purchase of contributed capital to economic organizations; expected transaction value of contracts for capital contribution, share purchase, purchase of contributed capital; information on investment projects of economic organizations (if any);
• Copies of legal papers of individuals, organizations contributing capital, buying shares, purchasing contributed capital and economic organizations with foreign investors contributing capital, buying shares or purchasing contributed capital: Passport (if an individual); Business license or equivalent document and passport of the person authorized to manage the capital portion in Vietnam (if it is an organization);
• A written agreement in principle on capital contribution, share purchase or purchase of contributed capital between foreign investors and economic organizations in which foreign investors contribute capital, purchase shares, purchase contributed capital or between foreign investors and shareholders or members of such economic organizations;
• A copy of the land use right certificate of an economic organization in which foreign investors contribute capital, purchase shares or purchase contributed capital if such economic organization has a land use right certificate in islands, communes, wards, border towns and coastal communes, wards and townships; other areas affecting national defense and security, except economic organizations implementing investment projects in industrial parks, export processing zones, hi-tech parks or economic zones established under the Government’s regulations.
• Power of attorney for Viet An Law.

Where to apply

Department of Planning and Investment where the economic organization is headquartered.

Order and procedure

If the capital contribution, share purchase or capital contribution of a foreign investor satisfies the conditions on ownership ratio and investment form in accordance with the Schedule of commitments and Vietnamese law, within 15 days from the date of receipt of complete dossiers, the Department of Planning and Investment will notify in writing. In case the application does not meet the conditions, the Department of Planning and Investment will notify in writing clearly stating the reason.

Step 2: Carry out procedures for transferring shares, contributed capital and changing shareholders, members and owners

Some questions related to the dossier of establishment of a foreign capital company operating in the field of construction

Can an individual establish a construction company?

According to Vietnam’s specific commitments on services at the WTO, the investor must be a legal entity of a WTO member or an ASEAN member state.

What types of companies can foreign investors establish to do construction activities in Vietnam?

Depending on the number of members, investors can choose one of the following types:

• One Member Limited Company;
• Limited liability companies with two or more members;
• Joint stock company.

How much capital can foreign investors own in the company to do construction business?

According to Vietnam’s specific commitments on services at the WTO, construction activities do not limit the capital contribution rate of foreign investors. Therefore, it is possible to establish a company from 1%-100% foreign capital.

Services of establishing foreign capital companies of Viet An Law Firm

• Advising on conditions for establishing a foreign capital company: capital contribution ratio of foreign investors in Vietnam; business conditions for trades; project implementation location; note the procedures before and after the establishment of a foreign capital company;
• Advising on choosing the right type of company for investors: Limited company or joint stock company;
• Advising on opening a capital transfer account, capital contribution duration;
• Consulting and guiding investors to prepare necessary documents to establish a foreign capital company;
• Advising and drafting company establishment documents for investors;
• Representing investors to work with competent state agencies of Vietnam in the process of carrying out company establishment procedures for investors (Application for Investment Registration Certificate, Business Registration Certificate, Business License,  License according to specialized requirements,  make legal entity seals, procedures after company establishment,…;
• Comprehensive, regular consultancy, accounting services, tax law package of activities arising in the process of conducting business in Vietnam for investors.