Regulations on termination of investment projects in Vietnam

Regulations on termination of investment projects in Vietnam (Source: Internet)

1. What is an investment project?

According to Clause 4, Article 3 of the Law on Investment 2020, “investment project” means a collection of proposals for the expenditure of mid-term or long-term capital to carry out investment activities in a particular administrative division over a certain period of time.

2. Types of investment projects in Vietnam

According to Clauses 5, 6 and 7 Article 3 of the Law on Investment 2020, the types of investment projects are as follows:

- “expansion project” means an investment project on development of a running project by expanding the scale, improving the capacity, applying new technologies, reducing pollution or improving the environment.

- “new investment project” means a project that is executed for the first time or a project independent from any other running project.

- “start-up project” means an investment project that implements ideas on the basis of exploiting intellectual property, technologies and new business models and is able to grow quickly.

3. Suspension of investment projects in Vietnam

The suspension of investment projects under Article 47 of the Law on Investment 2020 provides as follows:

(1) When suspending an investment project, the investor must notify the investment registration authority in writing. If the project has to be suspended in a force majeure event, the State shall allow the investor to be exempt from paying land rents or reduce land levies for the suspension period with a view to remedy consequences caused by the force majeure event.

(2) The investment authority shall decide to suspend an investment project in part or in full in the following cases:

- To protect sites/monuments, relics, antiques or national treasures in accordance with the Law on Cultural Heritage;

- To rectify a violation of the law on environmental protection at the request of the environment authority;

- To take measures to ensure occupational safety at the request of the labor authority;

- Pursuant to a judgment or decision of a court or an arbitral award;

- The investor fails to adhere to the written approval for investment guidelines or the investment registration certificate and recommits administrative violations after incurring penalties.

(3) The Prime Minister shall decide to suspend a project in part or in full if the project execution is detrimental or potentially detrimental to national defense and security at the request of the Ministry of Planning and Investment.

4. Termination of investment projects in Vietnam

According to Article 48 of the Law on Investment 2020, the termination of investment projects is as follows:

- An investor shall terminate their investment activities and/or investment project in the following cases:

+ The investor decides to terminate the project;

+ The project has to be terminated according to the conditions set out in the contract or charter of the enterprise;

+ The project duration is over.

- The investment registration authority shall terminate an investment project in part or in full in the following cases:

+ The investor fails to overcome the difficulties that lead to project suspension in the cases mentioned in item (2) and (3) of Section 3;

+ The investor is no longer permitted to keep using the investment location and fails to complete the procedures for change of investment location within 06 months from the date on which the investor is no longer permitted to use the investment location.

Except for cases where the land is recovered due to the fact that the land is not put into use or the land is slowly put into use.

+ The investment registration authority cannot contact the investor or the investor’s legal representative after 12 months from the date of suspension of the project;

+ Land reserved for the investment project is expropriated by the State for the reason that the land is not used or the land use is delayed in accordance with regulations of law on land;

+ The investor fails to pay the deposit or obtain a bank guarantee as prescribed by law if project execution security is required;

+ The investor conducted the investment activities on the basis of a sham civil transaction in accordance with the civil law;

+ Pursuant to a judgment or decision of a court or an arbitral award;

- Regarding a project subject to approval for its investment guidelines, the investment registration authority shall terminate the investment project after obtaining the opinion of the authority granting approval for investment guidelines.

- The investor shall themself liquidate the investment project in accordance with the law on liquidation of assets upon termination of the investment project, except for the case of the handling of land use rights and land-attached assets upon termination of operation.

- The settlement of the rights to use land and property on land upon termination of the investment project shall comply with the law on land and other relevant regulations of law.

- The investment registration authority shall decide to revoke the investment registration certificate if the investment project is terminated, except for the case of termination of part of the investment project.

Quoc Dat

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE