Establishment of a business organization to execute land-based investment project by successful investors in Vietnam

Establishment of a business organization to execute land-based investment project by successful investors in Vietnam (Image from the Internet)

On September 16, 2024, the Government of Vietnam issued Decree 115/2024/ND-CP guiding the Bidding Law 2023 on selecting investors to execute land-based investment project.

1. Establishment of a business organization to execute land-based investment project by successful investors in Vietnam

According to Article 51 of Decree 115/2024/ND-CP, the establishment of a business organization to execute land-based investment project by successful investors is carried out as follows:

The successful investor directly implements the project or establishes a business organization to implement the land-based investment project. A foreign investor who wins the bid must establish a business organization to be allocated or leased land to implement the project in accordance with the legal provisions on land.

The establishment, management, operation, and dissolution of business organizations established by the successful investor to execute land-based investment project shall comply with the laws corresponding to each type of business organization, the laws on investment, enterprises, land, real estate business, and sector-specific management laws.

- In the case of establishing a business organization to implement a land-based investment project under Clause 1, Article 51 of Decree 115/2024/ND-CP, the investor must propose it in the bidding dossier.

- The business organization established by the successful investor under Clause 1 and Clause 2, Article 51 of Decree 115/2024/ND-CP must be 100% capital-owned by the successful investor and meet the conditions to be allocated or leased land according to the land-related legal regulations and the establishment, management, operation, and dissolution conditions prescribed by the legal systems corresponding to each type of business organization, the investment laws, enterprise laws, land laws, real estate business laws, and sector-specific management laws.

- The business organization established by the successful investor has the following rights and obligations:

+ To be allocated or leased land by the state to execute land-based investment project under land-related legal regulations;

+ To inherit the rights and obligations of the successful investor as committed in the bidding dossier and stipulated in the project contract;

+ To fulfill the financial obligations of paying land levy and land rent according to the land-related legal regulations.

2. Guidance on executing land-based investment project by the accepted investor in Vietnam

The implementation of land-based investment project by the accepted investor in Vietnam shall follow the legal provisions on investment as detailed in Article 53 of Decree 115/2024/ND-CP as follows:

- The accepted investor shall implement the land-based investment project according to the decision on investor acceptance, the laws on enterprises, investment, construction, land, real estate business, sector-specific management laws, and other related laws.

- The accepted investor may directly implement the project or establish a business organization to implement the land-based investment project. The establishment, management, operation, and dissolution of a business organization established by the accepted investor to implement the land-based investment project shall comply with the laws corresponding to each type of business organization, the investment laws, enterprise laws, land laws, real estate business laws, and sector-specific management laws.

- The accepted investor shall be allocated or leased land and fulfill the financial obligations of paying land levy and land rent according to the land-related legal regulations.

More details can be found in Decree 115/2024/ND-CP, effective from the date of signing September 16, 2024.

From the effective date of Decree 115/2024/ND-CP, the following Decrees shall cease to be effective:

- Decree 25/2020/ND-CP detailing and guiding the implementation of several provisions of the Bidding Law 2023 on investor selection;

- Article 89 of Decree 35/2021/ND-CP detailing and guiding the implementation of the Public-Private Partnership Investment Law 2020.

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