Issue 020725 – Legal regulations on the suspension and liquidation of investment projects in Vietnam

Dear Valued Clients,

In the context of Vietnam’s ever-evolving and dynamic investment environment, investors may need to temporarily suspend or terminate their projects for various reasons—ranging from internal business considerations to requirements imposed by competent authorities or national security and defense concerns. Regardless of the circumstances, complying with the proper legal procedures related to the suspension and liquidation of investment projects is a critical factor in ensuring legality and minimizing risks for investors.

The following article aims to provide clients with an overview of legally permitted cases in which investment projects may be suspended. It also outlines the procedures involved and key considerations during the liquidation process after project termination. Through this, we hope to support investors in taking a more proactive approach to managing the final stages of their investment projects in a methodical, efficient manner that complies with current legal regulations.

 

1. Legal Provisions on Cases of Investment Project Suspension

a. Cases in Which Investment Projects Are Suspended

According to Article 47 of the 2020 Law on Investment, an investment project may be wholly or partially suspended in the following cases:

(a) Suspension of Operations at the Investor’s Request

For various reasons, an investor may wish to suspend their investment project. In such cases, the investor must submit a written notification to the investment registration authority within 05 working days from the date of the decision.

In cases where an investment project is suspended due to force majeure, the investor shall be exempt from land rent and entitled to a reduction in land use fees during the suspension period for the purpose of remedying the consequences caused by the force majeure event.

(b) Suspension of Operations at the Request of State Regulatory Authorities

The state investment management authority may decide to suspend or partially suspend the operation of an investment project in the following cases:

• To protect historical sites, antiquities, artifacts, and national treasures in accordance with the Law on Cultural Heritage;
• To remedy violations of environmental protection laws at the request of environmental authorities;
• To implement occupational safety measures as requested by labor management agencies;
• Pursuant to a legally effective judgment or decision of a court, or an arbitral award: In this case, the suspension period of the investment project is determined based on the court’s judgment or decision, the arbitral award, or the decision of the state investment management authority;
• The investor fails to comply with the contents of the investment policy approval or the Investment Registration Certificate, and has been administratively sanctioned but continues to violate, except in cases of failure to adhere to the schedule specified in the investment policy approval document, Investment Registration Certificate, or the documents approving adjustments to the investment policy or the adjusted Investment Registration Certificate.

(c) Suspension of Operations at the Request of the Prime Minister

The Prime Minister shall decide to suspend or partially suspend the operation of an investment project in cases where the implementation of such project causes or poses a risk of causing harm to national defense or security, based on the recommendation of the Ministry of Planning and Investment.

Note: The total suspension period of an investment project must not exceed 12 months.

b. Procedures for Suspension of Investment Project Operations

(a) Suspension at the Investor’s Request

Step 1: Preparation of the Application Dossier

The investor shall prepare a complete dossier in accordance with legal requirements. The dossier typically includes:

• Notification of suspension of investment project operations. The notification must contain the following key contents: Information on the investor; information on the economic organization implementing the investment project; status of project operation (implementation of administrative procedures, implementation progress); status of fulfillment of financial obligations; contents regarding the suspension of investment project operations; investor’s commitments.

• Power of attorney for the applicant who is not the legal representative; authorization contract or service contract with the organization providing dossier submission services, and letter of introduction from the organization for the individual submitting the dossier.

• Decision and meeting minutes (if any) regarding the suspension.

• A copy of the Investment Policy Decision / Investment Registration Certificate / Investment Certificate / Investment License / Business License or the Investment Policy Decision.

Step 2: Submission of the Application Dossier

The investor shall submit the application dossier to the investment registration authority within five working days from the date of the decision. The investment registration authority shall receive the dossier and issue a receipt and an appointment for result notification.

Step 3: Receipt of Results

Based on the appointment date stated on the receipt, the investor shall go to the investment registration authority to receive the result of the application processing.

(b) Suspension at the Request of State Regulatory Authorities

Based on the opinions of competent state authorities, the relevant agency shall decide to suspend, either wholly or partially, the operation of the investment project and notify the concerned agencies and the investor.

Step 1: Preparation of Meeting Minutes

– The state investment management authority or other competent authority shall prepare a written record before deciding to suspend or partially suspend the operation of the investment project.

– If the suspension of the investment project is carried out pursuant to a court judgment, court decision, or arbitral award, the state investment management authority shall base its decision to suspend, either wholly or partially, the operation of the investment project on the legally effective judgment, decision, or arbitral award.

Step 2: Notification

– After deciding to suspend the operation of the investment project, the state investment management authority shall notify the relevant agencies and the investor.

– For the suspension of an investment project pursuant to a court judgment, court decision, or arbitral award, the state investment management authority shall base its decision to suspend, either wholly or partially, the investment project on the legally effective judgment, decision, or arbitral award.

(c) Investment Projects That Harm or Pose a Risk to National Defense and Security

Step 1: Notification

For investment projects that harm or pose a risk of harming national defense and security, the provincial-level People’s Committee shall issue a written notification to the Ministry of Planning and Investment.

The notification shall include the following contents:

– The investor implementing the project;
– The objectives, location, scope, and implementation process of the project;
– Assessment of the impact or potential impact of the project on national defense and security;
– Recommendation on whether to suspend the entire project or suspend part of its operations.

Step 2: Decision by the Prime Minister

Based on the proposal of the provincial-level People’s Committee, the Ministry of Planning and Investment shall consult with the Ministry of National Defense and the Ministry of Public Security to submit a request to the Prime Minister for a decision on whether to suspend, wholly or partially, the operation of the investment project.

2. Liquidation of the Investment Project After Termination of Operations

After the investment project is lawfully suspended and the investor has no plan to resume implementation, or if a competent state authority decides to terminate the project, the investor shall be responsible for carrying out the investment project liquidation procedures as follows.

• In cases not involving the dissolution of an economic organization: The investor shall independently carry out the liquidation of assets, contracts, and financial obligations in accordance with civil law and other relevant sectoral laws.
• For investment projects where the State allocates land, leases land, or permits a change in land use purpose: The handling of land use rights and assets attached to the land shall be carried out in accordance with the land law and other relevant legal provisions.
• During the liquidation process, if the investor is an economic organization that is dissolved or falls into bankruptcy: The liquidation of the investment project shall be conducted in accordance with the laws on the dissolution and bankruptcy of economic organizations

As usual, we hope you find this Legal Article helpful and look forward to working with you in the upcoming time.

Kind regards,

ENT Law LLC
The full version of this Legal Update can be found here.

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[1] Point a, Clause 3, Article 56 of Decree No. 31/2021/NĐ-CP

[2] Point b, Clause 3, Article 56 of Decree No. 31/2021/NĐ-CP

[3] Point c, Clause 3, Article 56 of Decree No. 31/2021/NĐ-CP