Conditions for establishing a foreign-invested construction company in Vietnam

Legal grounds:

• Law on Investment 2020;
• Law on Enterprises 2020;
• Decree No.31/2021/ND-CP;
• Decree No.01/2021/ND-CP;
• The Construction law 2014;
• Schedule of commitments on services of Vietnam in WTO.

The construction industry is dominating the Vietnamese market today. Therefore, the need for foreign investors to set up construction companies in Vietnam is increasing. To help these companies complete the legal procedures to operate in Vietnam,  Viet An Law Firm would like to provide some conditions and information as follows:

Conditions for business investment when establishing a foreign-invested construction company in Vietnam

Conditions on capital:

According to the schedule of commitments on services of Vietnam in WTO, construction activities without limitation on capital contribution ratio of foreign investors. Therefore, investors can establish companies with 1% to 100% foreign capital.

Except for industries that require legal capital, there is no minimum amount of capital contributed by investors, but it must be consistent with the operation scale of the registered company.

Conditions related to lines of business:

According to the provisions of Vietnamese law, every enterprise has the right to freely engage in any business line that is not banned by law. In addition, investors when doing business in sectors and trades on the list of conditional business investments should pay attention to business conditions as prescribed by Vietnamese law. This is a condition that applies to all businesses (regardless of the nationality of the business).

According to the Schedule of commitments on services of Vietnam in WTO, investors are only allowed to operate in the following areas:

• General construction work for high-rise buildings (CPC 512);
• General construction work for civil engineering (CPC 513)
• Installation and assembly work (CPC 514, 516)
• Building completion and finishing work (CPC 517)
• Other (CPC 511, 515, 518)

Conditions on investors:

According to the Schedule of commitments on services of Vietnam in WTO, the investor must be a legal entity of a country that is a member of the WTO.

If foreign investors contribute capital immediately upon establishment, they need to prove their financial status through savings books, deposit balances, etc… for individuals, and deposit balances, tax reports, and relevant financial statements profit, … for the company. But if foreign investors contribute capital or purchase shares/stakes, they do not need to provide these documents.

Form of the establishment of a foreign-invested enterprise/company in Vietnam

Establishing a 100% foreign-invested enterprise

Step 1: Apply for Investment Registration Certificate in Vietnam

Before establishing a business organization, the foreign investor must have an investment project and follow the procedures for issuance of an investment registration certificate at the Department of Planning and Investment.

Documents include:

• Request for implementation of the investment project;
• Investment project proposal;
• Documents proving the investor’s financial capacity;
• Documentation of investor’s legal status;
• Authorization letter.

Step 2: Establishing a foreign-invested construction company in Vietnam

After being granted the Investment Registration Certificate, the investor shall establish a construction company in Vietnam according to the order and procedures specified in the Enterprise Law and relevant guiding documents.

Documents include:

• Application form for enterprise registration.
• The company’s charter.
• List of members of the multi-member limited liability company; lists of founding shareholders and shareholders that are foreign investors of the joint-stock company;
• A certified copy of your identity card or citizen identification card or passport (if you are an individual); establishment decision, Business Registration Certificate or equivalent document, and citizen identification card or identity card or passport with written authorization for the capital manager in Vietnam (if an organization);
• A certified copy of the issued Investment Registration Certificate;
• Authorization letter for Viet An Law Firm.

Establishment of a foreign-invested company by contributing capital, purchasing shares, or purchasing stakes

Step 1: Foreign investors register to contribute capital or purchase shares/stakes to economic organizations in Vietnam

Documents include:

• A registration form for capital contribution/purchase of shares/stakes
• Copies of legal documents of the individual or organization that contributes capital or purchases shares/stakes and of the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors;
• A principal agreement on capital contribution or purchase of shares/stakes between the foreign investors and the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors or between the foreign investors and the shareholders or members of such business organization.
• A copy of the certificate of land use rights, certificate of ownership of houses and land use rights or certificate of land use rights, ownership of houses and other property on land.
• Authorization letter for Viet An Law Firm.

Step 2: Foreign investors shall carry out the procedures for receiving and transferring shares or contributed capital of the representative appointee or shareholders or members.

Customers wishing to establish a construction company with foreign capital in Vietnam, please contact Viet An Law Firm for detailed support!