Our Vietnamese company operates in the field of retail goods. Recently, the company completed procedures for the sale of contributed capital to a foreign investor and officially transformed into a foreign-invested enterprise (FDI enterprise). We would like to ask SB Law’s legal experts whether, after converting to an FDI enterprise, our company is required to apply for a Business License and a Retail Establishment Establishment License? During the period of carrying out licensing procedures, is the existing store permitted to continue retail operations and what is the permitted duration?
Answer
– Pursuant to point c clause 6 Article 5 of Decree 342/2026/NĐ-CP, upon receiving capital contributions from foreign investors and becoming a foreign-invested economic organization, an enterprise engaging in goods purchase and sale activities and activities directly related to goods purchase and sale (retail distribution, establishment of retail outlets) shall be required to carry out procedures for applying for a Business License and a Retail Establishment Establishment License.
– Pursuant to point c clause 6 Article 5 of Decree 342/2026/NĐ-CP, during the period of carrying out procedures for applying for a Business License and a Retail Establishment License, the enterprise is still permitted to continue retail operations at operating establishments until a license is granted, but for a maximum period of no more than 12 months from the date stated in the document of the competent authority approving the foreign investor’s capital contribution,share purchase, or purchase of contributed capital. This is an important grace period for the enterprise to maintain continuous operation without commercial operation being interrupted.
– The difference between the first retail establishment and subsequent establishments: The enterprise is permitted to apply for a Business License simultaneously with the Retail Establishment License for the first retail establishment if such establishment is located in the same province or city as the head office. From the second retail establishment onward, the application process requires an independent and more rigorous appraisal procedure.
– Retail establishments with an area of 500 m² or more or belonging to separate investment projects shall be required to have an Investment Registration Certificate before carrying out procedures for applying for a retail license. Application dossiers for licensing may have to undergo the process of seeking opinions from the Ministry of Public Security and the Ministry of Defense (in case of investors outside market opening commitments) or the appraisal of Economic Needs Test (ENT) from the inter-disciplinary appraisal council. These are complex stages, requiring sharp business plan explanations and market rationales to be approved.
– If the 12-month time limit expires and the enterprise has not been fully granted a Business License and a Retail Establishment License, all retail operations at existing establishments shall be deemed unlicensed operations. The enterprise shall face the risk of being penalized for administrative violations, having illicit profits disgorged, and being compelled to suspend its retail business operations
Conclusion:
Converting to an FDI enterprise expands capital opportunities but imposes strict compliance with Business License and Retail Establishment License rules under Decree 342/2026/ND-CP, bound by a 12-month statutory grace period.
If your enterprise requires in-depth advice on FDI restructuring, evaluating retail license conditions, or preparing ENT explanatory statements for retail chains, please contact SB Law for timely and effective support from our specialized legal team.
