Guidelines for use of land in case of consolidation, merger of an enterprise

Guidelines for use of land in case of consolidation, merger of an enterprise in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Guidelines for use of land in case of consolidation, merger of an enterprise in Vietnam

Guidance on use of land in case of consolidation, merger of an enterprise according to Article 10 of Circular 02/2015/TT-BTNMT is as follows:

- In case a consolidated or merged company was allocated land without payment of land levy, or leased land with land rents paid once for the entire lease, allocated land with payment of land levy, received transfer of land use right with land levy, land rents already paid, amount of money paid for transfer of land use right originating from state budget, the Service of Natural Resources and Environment shall make the submission to People’s committees of provinces for decision on recovery of land from consolidated or merged company for allocation or leasing of land to consolidated or merging companies.

Land price for calculation of land levy, land rents shall be the land price decided by People’s committees of provinces at the time of allocation of land, leasing of land;

- In case a consolidating or merged company was leased land (by the state) with land rents paid annually, or allocated land with payment of land levy, leased land with land rents paid once for the entire lease, received transfer of land use right with land levy, land rents already paid, amount of money paid for the transfer of land use right not originating from state budget, the consolidated or merging companies shall be responsible for registering changes of land, land-linked properties according to the procedures prescribed in Article 85 of the Decree  43/2014/NĐ-CP; re-signing a land lease contract with the Service of Natural Resources and Environment in case of land lease without re-issuance of the decision on land lease.

Land price for calculation of land rents to be paid annually by consolidated or merging companies shall be the land price determined for calculation of land rents for consolidating or merged companies if the time of consolidation or merging falls within a five-year cycle with land rents being unchanged and shall be re-determined according to Decree 46/2014/NĐ-CP after the end of such five-year cycle.

- In case consolidation or merging of an enterprise takes place simultaneously with conversion of land use purpose, execute conversion of land use purpose as prescribed simultaneously with procedures for recovery, allocation and leasing of land, registration for changes of land, land-linked properties as prescribed in Clauses 1, 2 of Article 10 of Circular 02/2015/TT-BTNMT.

For conversion of land use purpose that requires permission of competent state agencies, the land price for calculation of land levy, land rents shall be the land price decided by People’s committees of provinces at the time the decision on conversion of land use purpose is issued by competent state agencies;

2. Guidelines for use of land in case of division, separation of an enterprise in Vietnam

According to Article 9 of Circular 02/2015/TT-BTNMT, in case an enterprise using land carries out division, separation according to the Law on Enterprises, use of land is instructed as follows:

- Decision on division, separation of an enterprise must specify individual enterprises entitled to use the land, rights and obligations of individual enterprises for the use of land after division, separation;

In case division of land use rights among enterprises after division, separation results in division, separation of the land parcel, such division, separation must accord with land use planning, plans; detailed urban construction planning; rural residential area planning; new rural planning.

- Division, separation of enterprises involving division of land use rights among enterprises without change of land use purpose shall be handled as follows:

+ In case a to-be-divided, separated company was allocated land (by the state) without payment of land levy, or leased land with land rents paid once for the entire lease, allocated land with payment of land levy, received transfer of land use right with land levy, land rents already paid, amount of money paid for transfer of land use right originating from state budget, the Service of Natural Resources and Environment shall make submission to People’s committees of provinces for decision on recovery of the land from the divided, separated companies for allocation, leasing of land to companies after division, separation according to the Law on Land.

Land price for calculation of land levy, land rents shall be the land price decided by People’s committees of provinces at the time of allocation of land, leasing of land to companies after division, separation;

+ In case a to-be-divided, separated company was leased land (by the state) with land rents paid annually, or allocated land with payment of land levy, leased land with land rents paid once for the entire lease, received transfer of land use right with land levy, land rents already paid, amount of money paid for the transfer of land use right not originating from state budget, the companies using the land after division, separation shall inherit rights and obligations of the divided, separated company for land use and shall be responsible for executing registration of changes of land, land-linked properties as prescribed in Article 85 of the Decree  43/2014/NĐ-CP; re-signing a land lease contract with the Service of Natural Resources and Environment in case of land lease without re-issuance of the decision on land lease.

Land price for calculation of land rents to be paid annually by companies after division, separation shall the land price determined for calculation of land rents for divided, separated companies if the time of division, separation falls within a five-year cycle with land rents being unchanged and shall be re-determined according to the Decree 46/2014/NĐ-CP after the end of such five-year cycle.

- In case division, separation of an enterprise takes place simultaneously with conversion of land use purpose, execute conversion of land use purpose as prescribed simultaneously with procedures for recovery, allocation and leasing of land, registration for changes of land, land-linked properties as prescribed in Clause 2 of Article 9 of Circular 02/2015/TT-BTNMT.

For conversion of land use purpose that requires permission of competent state agencies, the land price for calculation of land levy, land rents shall be the land price decided by People’s committees of provinces at the time the decision on conversion of land use purpose is issued by competent state agencies;

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