Conditions and Procedures for Establishing a Foreign-Invested Construction Company – Latest Update

Establishing a construction company with foreign capital in Vietnam requires strict compliance with a series of legal conditions and procedures. With the rapid development of the economy and an increasingly open investment environment, regulations related to foreign investment in the construction sector have been adjusted to align with international integration trends. However, foreign investors must fully understand the investment conditions, capital contribution ratios, permitted business lines, and administrative procedures to ensure full compliance with Vietnamese law. This article provides the latest updated information on the conditions and procedures for establishing a foreign-invested construction company in Vietnam.

Conditions for Investing in the Construction Business When Establishing a Foreign-Invested Company

The construction sector falls under conditional business lines. Therefore, in addition to meeting the general conditions for establishing a foreign-invested company, the enterprise must also satisfy sector-specific conditions. Specifically:

• The investor must have its principal office (organization) in a country that is a member of the WTO together with Vietnam;
• The registered business lines must not be prohibited and must be included in Vietnam’s WTO commitments;
• The investor must prove its experience and financial capacity to implement the project;
• Must meet requirements regarding practice certificates and legal capital as prescribed by law;
• Fulfill tax obligations in Vietnam, including corporate income tax, import tax, value-added tax, profit remittance tax abroad, etc.

Conditions Regarding Capital for Foreign Investors

Pursuant to Vietnam’s WTO commitments, the construction sector has no restrictions on the foreign investor’s capital contribution ratio. Therefore, a company may be established with foreign capital ranging from 1% to 100%. Except for sectors requiring legal capital, there is no fixed minimum capital contribution for foreign investors, but the amount must be commensurate with the scale of operations registered by the company.

Conditions Related to Business Lines

Pursuant to current Vietnamese law, enterprises are not permitted to engage in prohibited business lines. Additionally, when conducting business in conditional investment and business sectors, investors must comply with the business conditions prescribed by Vietnamese law—these conditions apply to all enterprises regardless of nationality.

Pursuant to Vietnam’s WTO commitments, foreign investors are only permitted to operate in the following areas:

• Construction of high-rise buildings (CPC 512);
• Construction of civil engineering works (CPC 513);
• Finishing and installation works (CPC 514, 516);
• Completion of high-rise construction projects (CPC 517);
• Various construction works (CPC 511, 515, 518).

Conditions Regarding Foreign Investors When Establishing a Construction Company

Pursuant to Vietnam’s WTO commitments, the investor must be a legal entity from a WTO member country. Foreign investors contributing capital from the time of establishment must prove their financial capacity. For individuals, this can be demonstrated through savings books or bank balances; for companies, through bank balances, tax declarations, and profitable financial statements. However, if the foreign investor contributes capital by purchasing shares, these documents are not mandatory.

Forms for Establishing a Foreign-Invested Enterprise/Company

In Vietnam, foreign investors may establish an FDI enterprise in two forms: direct investment and indirect investment, each with specific conditions:

– For **direct investment**, foreign investors establishing a foreign-invested company or a 100% foreign-owned company must satisfy the conditions under Article 22 of the Investment Law 2020.
– For **indirect investment**, foreign investors contribute capital, purchase shares, or capital contributions in a Vietnamese company (simplified as establishing a 100% Vietnamese-owned company and then transferring capital to the foreign investor). The conditions for foreign investors to establish an enterprise in this form are prescribed in Clause 2, Article 24 of the Investment Law 2020.

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Sequence and Procedure for Establishing a 100% Foreign-Invested Construction Company

The procedure for establishing a foreign-invested company with capital contribution from 1% to 100% by foreign investors from the time of establishment is carried out in the following steps:

**Step 1:** Prepare the dossier for issuance of Investment Registration Certificate

To obtain the Investment Registration Certificate, foreign investors must prepare the following dossier:

• Application for implementation of the investment project;
• Documents proving legal status:

Depending on the type of organization, the investor must prepare the following specific documents:

• For organizational investors: certified copy of the establishment certificate or other equivalent legal document to verify legal status.
• For individual investors: certified copy of citizen identity card/citizen identity card or passport.

• Investment project proposal including: investor implementing the project, investment objectives, scale, location, duration, progress, labor demand, proposed investment incentives, socio-economic impact assessment and efficiency.
• Documents proving the investor’s financial capacity:

• For organizational investors: financial statements for the two most recent years or commitment of financial support from the parent company or financial institution or financial capacity guarantee from the investor.
• For individual investors: bank balance confirmation, savings book, etc.

• Documents related to lawful right to use the project location such as lease contracts, land use right certificates, construction permits, approved construction planning decisions, land allocation/lease decisions, etc.
• Proposed land use demand for project implementation
• Explanation of technology use for the investment project, including detailed information on technology name, technology origin, technology process diagram, main technical specifications, and status of use of main machinery, equipment, and production lines.

**Step 2:** Submit the dossier for issuance of Investment Registration Certificate

For investment projects not requiring investment policy approval, foreign investors shall apply for the Investment Registration Certificate according to the following procedure: Declare project information on the National Foreign Investment Information System:

• The investor declares project information online on the National Foreign Investment Information System before submitting the dossier for issuance of the Investment Registration Certificate. After online declaration, the dossier for issuance of the Investment Registration Certificate must be submitted to the Investment Registration Authority within 15 days from the date of online declaration.
• After the Investment Registration Authority receives the dossier, the investor is granted an account to access the National Foreign Investment Information System to monitor dossier processing. The Investment Registration Authority uses this system to receive, process, and assign a project code.

**Step 3:** Issuance of Investment Registration Certificate

Within 15 working days from receipt of a complete dossier, the Investment Registration Authority shall issue the Investment Registration Certificate. If the dossier is rejected, the authority shall notify the investor in writing and clearly state the reasons.

**Step 4:** Prepare and submit the dossier for issuance of Enterprise Registration Certificate

After receiving the Investment Registration Certificate, the investor must carry out the procedure for issuance of the Enterprise Registration Certificate in the same manner as for a Vietnamese-invested company.

The dossier for issuance of the Enterprise Registration Certificate includes:

• Application for enterprise registration;
• Company charter;
• List of members or shareholders;
• Certified copies of citizen identity card/citizen identity card/passport or other lawful personal identification documents for individuals;
• Establishment decision, business registration certificate or equivalent document of the organization and power of attorney; certified copy of lawful personal identification documents of the legal representative in the case of an organization;
• For foreign organizational members: certified copy of the business registration certificate or equivalent document must be consular legalized;
• Investment Registration Certificate issued to foreign investors.

**Step 5:** Public disclosure of enterprise registration information

After receiving the Enterprise Registration Certificate, the enterprise must publicly disclose the information on the National Enterprise Registration Portal and pay the prescribed disclosure fee.

The disclosure includes information on business lines, list of founding shareholders, and list of foreign investor shareholders in the case of a joint-stock company (if any).

The request for disclosure of enterprise registration information and payment of the disclosure fee shall be made when submitting the enterprise registration dossier. In addition, Decree 122/2021/ND-CP prescribes penalties for investors who fail to disclose or disclose inaccurate information on the national enterprise registration portal.

**Step 6:** Engrave the company seal

The seal includes seals made at seal engraving establishments or seals in the form of digital signatures in accordance with electronic transaction laws.

The enterprise shall decide the type, number, form, and content of its seal, as well as those of its branches, representative offices, and other units.

The management and storage of the seal shall comply with the company charter or regulations issued by the enterprise. The enterprise shall use the seal in transactions as prescribed by law.

**Step 7:** Issuance of Business License or License for Sufficient Conditions to Operate

The issuance of a Business License applies to enterprises specializing in retail sales of goods to consumers or establishing retail outlets for goods. For certain conditional sectors, after completing the company establishment procedures, foreign investors must apply for additional licenses related to operating conditions, such as food safety and hygiene licenses, environmental licenses for the food business, training licenses in the education sector, and travel licenses in the tourism sector.

To meet the conditions for issuance of a Business License for retail sales of goods, foreign investors must satisfy the following requirements:

• For foreign investors from countries or territories participating in international treaties to which Vietnam is a party, there must be commitments to open the market for goods trading and activities directly related to goods trading.
• Comply with market access requirements as prescribed in international treaties to which Vietnam is a party.

– Have a financial plan to implement business activities;
– Ensure no overdue tax debts in cases where the enterprise has been operating in Vietnam for at least 1 year or more.

In addition, to be issued a Business License for retail sales of goods, foreign investors must consider the following factors:

• Compliance with specialized laws.
• Compatibility with the level of competition of domestic enterprises in the same sector.
• Ability to create employment for domestic workers.
• Contribution to the state budget.

Specifically, the procedure for applying for a Business License for retail sales of goods for foreign-invested enterprises must be carried out in the following steps:

• Application for issuance of Business License
• Detailed explanation of the conditions for issuance of Business License as prescribed in Article 9 of Decree 09/2018/ND-CP.
• Detailed business plan including description of content and method of implementation of business activities, assessment of impact and socio-economic efficiency of the plan.
• Specific financial plan, including audited business performance reports and current financial status of the enterprise.
• Documents proving no overdue tax debts from the tax authority.
• Certified copy of the Enterprise Registration Certificate and Investment Registration Certificate for goods trading projects and activities directly related to goods trading (if any).

The process of issuing a Business License for retail sales of goods to foreign-invested enterprises is carried out by the Department of Industry and Trade where the enterprise has its principal office, with an expected processing time of approximately 30–45 working days.

**Step 8:** Open a foreign direct investment capital account

This account is used to transfer capital within the capital contribution period recorded in the Investment Registration Certificate.

In addition, FDI companies must open additional transaction accounts to receive funds from the capital investment account for conducting receipts and payments in Vietnam.

**Procedure for Establishing a Foreign-Invested Company Through Capital Contribution, Share Purchase**

**Step 1:** Establish a Vietnamese-invested company

Foreign investors may only participate in capital contribution or share purchase when an existing Vietnamese enterprise is already in place. In addition, if the establishment procedure has not been completed, the Vietnamese partner must establish a company with 100% Vietnamese capital.

**Step 2:** Prepare the dossier for registration of capital contribution purchase or share purchase by foreign investors

The dossier includes:

1. Dossier for registration of capital contribution or share purchase, including detailed information on the economic organization in which the foreign investor proposes to contribute capital or purchase shares or capital contributions. The content must include the ratio of charter capital ownership by the foreign investor after capital contribution or share purchase.
2. Certified copy of personal identification documents of individual investors. For organizational investors, certified copy of the establishment certificate or other equivalent document to verify legal status.
3. Agreement on capital contribution or share purchase between the foreign investor and the economic organization receiving capital or shares.
4. Declaration (with certified copy) of the land use right certificate of the economic organization receiving capital or shares from the foreign investor.

**Step 3:** Submit the dossier for registration of capital contribution purchase or share purchase by foreign investors

After preparing the complete dossier, the foreign investor submits the dossier to the Investment Registration Office of the Department of Planning and Investment of the province where the enterprise has its principal office.

Within 15 working days from receipt of a complete and valid dossier, the Department of Planning and Investment shall issue a Notice confirming satisfaction of the necessary conditions for capital contribution, share purchase, or capital contribution purchase in the company in Vietnam.

**Step 4:** The foreign investor carries out capital contribution, share purchase

In cases where the foreign investor decides to contribute more than 51% capital, the Vietnamese company must open a direct investment capital account. Transfer of the investor’s capital package through this account shall be carried out in accordance with regulations. In addition, members and shareholders who have transferred capital must declare and pay personal income tax and corporate income tax (if applicable) as prescribed by law.

**Step 5:** Amend the enterprise registration certificate

After completing the capital contribution or share purchase process, the company shall carry out procedures for amending the enterprise registration. This includes updating information on capital contribution and share purchase by foreign investors in the enterprise registration dossier with the competent authority. The required documents include:

• Notice of amendment to enterprise registration contents.
• Decision on amendment by the company (if any).
• Minutes of the General Meeting of Shareholders/Limited Liability Company related to the amendment contents (if any).
• Capital transfer contract and related documents.
• List of foreign members or shareholders participating in capital contribution.
• Certified copy of passport or business registration certificate of the investor.

The foreign investor carries out the amendment of the enterprise registration certificate at the Department of Planning and Investment where the company has its principal office.

**Step 6:** Issuance of Business License and License for Sufficient Conditions to Operate

Similar to the case of capital contribution from the beginning, enterprises operating in the field of retail sales of goods or establishing retail outlets for goods must apply for a Business License. For certain conditional sectors, obtaining additional licenses related to operating conditions is necessary for the enterprise to be permitted to carry out activities.

Procedure for Obtaining a Construction Permit (Sub-license)

Construction permits include: new construction permits, repair and renovation permits, and relocation permits.

Construction permits are classified by type of works and projects as follows:

• Permits for individual residential houses;
• Linear works;
• Non-linear works;
• Religious and belief works;
• Monument and mural works;
• Works of diplomatic agencies and international organizations.

Preparation of Dossier

• Application for issuance of construction permit;
• Documents proving land use rights;
• Fire prevention and fighting design appraisal certificate, documents and drawings approved in accordance with fire prevention and fighting laws;
• Construction design drawings (2 sets):

• Site plan of the works on the land plot;
• Floor plans, elevations, main cross-sections of the works;
• Foundation plan, foundation cross-sections with schematic diagram of connection to external technical infrastructure systems including water supply, drainage, and electricity supply.

Sequence and Procedure for Applying for a Construction Permit

After preparing the dossier as guided above, the foreign-invested enterprise owner submits it to the competent authority requesting issuance of a construction permit according to the type of works.

Authority Issuing Construction Permits for Foreign-Invested Companies

Depending on the nature and type of works, the competent authority responsible for appraisal and issuance of construction permits will differ.

• Provincial People’s Committee: Issues construction permits for works subject to permitting requirements within the province, except for works under the jurisdiction of district-level People’s Committees;
• Provincial People’s Committee authorizes the Department of Construction, Management Boards of industrial zones, export processing zones, hi-tech zones, economic zones, or district-level People’s Committees: Issues construction permits for works within the functions and scope of these agencies;
• District-level People’s Committee: Issues construction permits for Grade III and Grade IV works and individual residential houses within its management area.

From the date of receipt of a valid dossier, the competent authority shall conduct on-site surveys and issue the construction permit if the works or project meet the requirements within the following time limits:

• 15 working days for issuance of permits for individual residential houses;
• No more than 20 working days for issuance of permits for construction works.

Consultation Services for Establishing a Foreign-Invested Construction Company at BKC Law

The service for establishing foreign-invested construction companies at BKC Law provides comprehensive and rapid solutions, helping foreign investors easily enter the construction market in Vietnam. With a team of experienced lawyers and in-depth knowledge of investment law, we are committed to supporting clients from legal consultation, dossier preparation, to completing related administrative procedures. BKC Law ensures a fast and accurate process in full compliance with legal regulations, enabling enterprises to commence operations effectively and sustainably.

To receive free legal consultation at BKC Law, please contact our lawyers using the following information:

Telephone: 0901 3333 41
Email: info@bkclaw.vn
Branch in District 1: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City
Branch in Binh Tan: 41 Ten Lua Street, Binh Tan District, Ho Chi Minh City

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