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Establish foreign-owned construction company in Vietnam

At the moment, demand on construction services in Vietnam is quite high as the local real-estate market has been growing rapidly in the current years, especially in crowded cities like Ho Chi Minh City, Hanoi, Binh Duong, Da Nang… Many foreign-owned construction companies have gained successes and trust in Vietnam for their expertise and effective construction methods during constructing process as well as completion stage. Now the limitations on foreign investment in construction business are waived; simultaneously, market’s demand is still growing. Therefore, it is considered as the right time for investment decisions. In order to give our Clients a hand to establish foreign-owned construction company in Vietnam, Viet An Law Firm collects and provides some basic information as follows:

Legal documents:

  • The Schedule of Specific Commitments in Services of Vietnam in WTO;
  • The Law on Investment 2014;
  • The Law on Enterprises 2014;
  • The Law on Construction 2014;
  • Decree No. 59/2015/NĐ-CP on construction project management;
  • Decree No. 42/2017/NĐ-CP on supplementation, amendment of some articles of Decree No. 59/2015/NĐ-CP (takes effect on June 1st 2017).

In accordance with the Schedule of Specific Commitments in Services of Vietnam in WTO, construction services include:

  • General construction work for building: CPC 512;
  • General construction work for civil engineering: CPC 513;
  • Installation and assembly work: CPC 514, 516;
  • Building completion and finishing: CPC 517;
  • Other: CPC 511, 515, 518.

According to clause 21 Article 3 of the Law on Construction 2013, construction activities include: “instruction planning, formulation of a investment project to construct a work, construction survey, construction design, construction, construction supervision, project management, selection of contractors, pre-acceptance test, handover of the work for exploitation or use, its warranty and maintenance and other activities related to its construction”.

As the laws of Vietnam and the Schedule waived limitations on investment forms and foreign capital, foreign investors are able to establish foreign-owned construction company in Vietnam to provide construction services with foreign capital rate can be up to 100% of the charter capital. There are two options foreign investors can choose:

  • Establish foreign-owned construction company in Vietnam;
  • Contribute capital, purchase shares, purchase capital contributions to Vietnamese construction company in Vietnam.

Option 1: Establish foreign-owned construction company in Vietnam

Step 1: Apply for the Investment Registration Certificate

  • A written request for permission for project execution;
  • Individual investors: copies of ID or passport of each individual;
  • Organization investors: copies of Establishment Certificate or equivalent paper confirming the legal status;
  • Project proposal specifying: the investors, project’s objectives and scale; capital and capital rising method; location, duration and schedule of the project; labor demand;
  • Copies of financial statements in the current 02 years or financial support commitment of the parent company or financial institutions; guarantee for investors’ financial capacity, description of investors’ financial capacity; request for investment incentives; assessment of socio-economic effects of the project;
  • Land use demand. If the project does not use land allocated or leased by the State or does not require the State to change land use purpose, the copies of the lease agreement or equivalent papers proving that investors have rights to use the location shall be submitted;
  • If the project use any technology in the List of technologies restricted from transfer, investors have to submit the explanation on technology transfer.

Submit the application at: The Department of Planning and Investment.

The process: Within 15 days from the receipt date of the valid application, the Department of Planning and Investment will grant the Investment Registration Certificate to foreign investors. If the Department of Planning and Investment refuse to grant, they will respond in notices and explain the reasons.

Step 2: Establish foreign-owned construction company in Vietnam

Apply for the Business Registration Certificate:

An application includes:

  • A written request for business registration;
  • The Articles of Associates;
  • The list of members of the multi-member limited liability company or the list of partners of partnership;
  • Notarized copies of ID or valid passport of each individual member; notarized copies of the Business Registration Certificate/Establishment Certificate of each organization member; notarized copies of ID or valid passport of each legal representative of each organization;
  • Power of attorney (Clients grant to Viet An);
  • Certificate of Investment Registration of foreign investors.

Submission place: The Department of Planning and Investment.

Duration: 03 – 06 working days.

Announce the business registration contents:

  • Business registration information must be announced publicly on the National Portal of Business Registration within 30 days from the date of issuance of the Business Registration Certificate. The contents of the announcement are all the information stated in the Business Registration Certificate.
  • Notice: In accordance with Clause 1 Article 26 of the Decree 50/2016/NĐ-CP, if the company does not announce or lately announce the business registration information on National Portal of Business Registration, they are fined an amount of money from 1.000.000 VND to 2.000.000 VND.

Engrave the seal and publish the seal sample:

  • The company can authorized Viet An Law Firm or can engrave the seal by itself then announce the seal sample to the Department of Planning and Investment. The company is allowed to decide about the appearance, quantity and the contents of the deal but it must contain the name and the code of the company;
  • After receiving the announcement on the seal sample, the Business Registry Office shall grant the receipt to the company, post the announcement on the National Portal of Business Registration and issue the Announcement on Publication of the seal sample to the company.

Notice: Providing construction services is a conditional business sector listed in the Law No.03/2016/QH14 then, in order to legally operate in Vietnam, the company shall satisfy regulated conditions in the specialized laws.

Step 3: Apply for Certificate of eligibility to execute construction

An application for Certificate of eligibility to execute construction includes:

  • A written request for Certificate of eligibility to execute construction: using the form in the Annex 3 – Circular No.17/2016/TT-BXD;
  • Copy of the Business Registration Certificate or establishment decision;
  • The list providing working experiences, construction practices, labor contracts of key individuals working in the company;
  • A declaration on company’s professional experiences mentioning at least 03 typical latest tasks for each registered field;
  • A declaration on financial capacity; machines, devices, computer software for each registered field;
  • A task management process; a quality management system for each registered field.

Submission place:

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

The process: Within 10 days from the date of receipt, the Ministry of Construction/the Department of Construction shall examine the validity and completion of the application. In case the application missed or invalid, the Ministry or the Department of Construction will grant a written respond to the company to supplement the application or conduct assessment on the application (if necessary). After that, within 15 days with Class I certificate, 10 days with Class II and III certificate, the Testing Council will assess and submit to the Ministry or Department of Construction to decide to grant the Certificate of eligibility to execute construction or not.

Option 2: Contribute capital, purchase shares, purchase capital contribution to Vietnamese construction company

This option helps investors save time and money as they do not have to apply for the Investment Registration Certificate but just register to contribute capital, purchase shares, purchase capital contribution to Vietnamese construction company. When the Department of Planning and Investment approve, foreign investors just need to change the members/shareholders of the company. Besides that, a Vietnamese construction company already has the Certificate of eligibility to execute construction. Only when foreign investors plan for larger projects, they need to re-apply for this certificate (if needed).

Step 1: Foreign investors register to contribute capital, purchase shares/capital contributions to the company

Application includes:

  • Application for capital contribution, shares/capital contributions purchase indicating: the information of the target company, the foreign capital contribution after completing the procedures;
  • Copies of the ID or passport of each individual investor; copies of Establishment Certificate or equivalent papers confirming the legal status of each investor who is an organization.

Submission place: The Department of Planning and Investment.

The process: If the capital contribution, shares purchase, capital contribution purchase of foreign investors comply with the regulations on investment forms and foreign capital contribution, within 15 days from the date of receipt of the valid application, the Department of Planning and Investment will grant a written announcement. If the application does not satisfies conditions, the Department of Planning and Investment will grant a written announcement providing reasons and explanation.

Step 2: Transfer the shares, capital contributions and change the shareholders or members of the company

Foreign investment services in Viet An Law Firm:

  • Consult about conditions of each business sectors for foreign investors in Vietnam;
  • Consult about foreign investment procedures and process in Vietnam;
  • Draft, prepare and perform the procedures at state-agencies when being authorized by Clients;
  • Consult about after-establishing issues: contracts, labor, tax, social insurance…

If you need legal advice to establish foreign-owned construction company in Vietnam as well as any issues relating to foreign investment and enterprises in Vietnam, please feel free to contact Viet An Law Firm for more information!

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