Issue 040222 – Procedures for transferring investment project

Dear Valued Clients,

During the implementation of an investment project, the Law on Investment No. 61/2020/QH14 (“the “Law”) allows investors to transfer part of or the whole investment projects to other investors when they meet certain conditions and comply with the procedures as prescribed by law. In this Legal Article, ENT would like to introduce to you the procedure for transferring investment projects.

A. Conditions for transfer of investment project[1]

The investor is entitled to transfer part of or the whole investment project to another investor when the following conditions are satisfied:

a) The investment project or the part of the investment project which is transferred has not been terminated in accordance with Article 48.1 and Article 48.2 of the Law[2];

b) The foreign investor receiving the investment project or part of the investment project must satisfy the conditions set out in Article 24.2 of the Law[3];

c) The conditions set forth the law on land are complied with if the transfer of an investment project is associated with transfer of the land use rights/assets on land;

d) The conditions set forth in the laws on residential housing and on real estate business are complied with in the case of transfer of a residential housing construction project or real estate project are complied with;

e) The conditions set forth in the written approval of investment guidelines (“AIG”) or the investment registration certificate or in accordance with other relevant regulations of law (if any) are complied with;

f) Upon transfer of an investment project, in addition to compliance with Article 46 of the Law, the state-owned enterprise shall comply with the Law on management and use of state capital invested in manufacturing and business activities of enterprises before making any adjustment to the investment project.

B. Procedures for transferring part of or the whole investment project

1. For investment project in which the investor has been approved in accordance with Article 29 of the Law and the investment project has been issued with an investment registration certificate, the investor shall follow procedures for transfering:

1.1. Sign a contract for transfer of the investment project

When all the conditions for transfer of investment project are satisfied, investor can sign a contract to transfer part of or the whole investment project to the transferee.

1.2. Adjust the investment project[4]

1.2.1. Application for adjustment of the investment project[5]:

An application is composed of:

a) An application form for adjustment of the investment project (Form A.I.11.a issued together with Circular 03/2021/TT-BKHDT);

b) A report on the investment project’s progress by the time of project transfer;

c) A contract or principal contract for transfer of part of or the whole investment project;

d) Copies of documents about the legal status of the transferor and transferee;

e) A copy of the investment registration certificate; the decision on AIG; the decision on investor approval (if any);

f) A copy of the BCC (for BCC investment projects);

g) A copy of one of the following documents of the transferee: financial statements for the last 02 years or equity audit report of the investor, commitment of the parent company to provide financial support or commitment of a financial institution to provide financial support, guarantee for the investor’s financial capability or a document describing the investor’s financial capability

1.2.2. Procedures for adjusting the investment project

(i) For investment project which has had its AIG together with approval for the investor but the investor has transferred whole of the project before it is operated or there is a change of conditions applicable to the investor, the procedures for adjusting the project are as follows[6]:

Step 1: The transferor shall submit 08 sets of the application to the Ministry of Planning and Investment or 04 sets of the application to the investment registration authority corresponding to the power of AIG of the project;

Step 2: The authority shall consider the conditions for project transfer set forth in Article 46.1 of the Law to decide to adjust the investment project. The decision on approval for change of investor shall record the transferor, transferee and part of the project transferred (if any), and be sent to the investment registration authority, transferor and transferee.

(ii) For investment project which has had its AIG and the transfer thereof changes any content of AIG in one of the cases mentioned in Article 41.3.(a)(b)(c)(d)(đ)(e) of the Law, the transferor shall follow the procedures for adjusting the project according to the corresponding regulations set out in Article 48.6 of the Decree No. 31/2021/ND-CP (the “Decree”)[7].

(iii) For investment project which has had its AIG and the transfer thereof does not change any content of AIG in one of the cases mentioned in Article 41.3.(a)(b)(c)(d)(đ)(e) of the Law, the transferor shall follow the procedures for adjusting the decision on investor approval instead of the procedures for approving the adjustment of the investment guidelines as following conditions[8]:

Step 1: The transferor shall submit to the investment registration authority 04 sets of the application in which the application form for investment project adjustment is replaced with the application form for approval for change of investor;

Step 2: Within 03 working days from the receipt of the valid applications, the investment registration authority shall send them to concerned competent authorities at the same level about the compliance with regulations set out in Article 33.4.(b)(c) of the Law;

Step 3: Within 15 days from the receipt of the valid applications, the enquired authorities shall give their opinions about the contents under their state management to the investment registration authority;

Step 4: Within 25 days from the receipt of the valid applications, the investment registration authority shall prepare an appraisal report on the contents in Article 33.4.(b)(c)(d) of the Law and submit it to the provincial People’s Committee;

Step 5: Within 07 working days from the receipt of the applications and appraisal report, the provincial People’s Committee shall decide to approve the change of investor;

Step 6: The decision on approval for change of investor shall record the transferor, transferee and part of the project transferred (if any), and be sent to the investment registration authority, transferor and transferee.

(iv) For investment project which has had its AIG and has been put into operation, the investor is not required to follow the procedures for approving investment guideline adjustment upon transfer of the project[9].

(v) For investment project which has been issued with the investment registration certificate and not subject to AIG or has had its AIG in a case other than the case specified in Article 41.3 of the Law, the procedures for adjusting the project are as follows[10]:

Step 1: The transferor shall submit 01 set of the application to the investment registration authority;

Step 2: The investment registration authority shall consider the conditions for project transfer to adjust the investment project in accordance with Article 47 hereof.

(vi) Procedures for adjusting an investment project in case where a foreign investor receives the investment project and establish a business organization to execute the project[11]:

Step 1: The transferor shall follow the procedures for project adjustment in accordance with the corresponding regulations.

Step 2: After completing the procedures set out in Step 1, the transferee shall follow procedures for establishing a business organization in accordance with regulations of law on enterprises corresponding to each type of business organization. From the date on which the enterprise registration certificate or another equivalent document is issued, the business organization established by the foreign investor shall be the investor who executes the investment project as prescribed in Article 22.2 of the Law

2. For an investment project other than that prescribed in Section 1. above, the transfer of the investment project or transfer of asset ownership to the investor receiving the investment project shall be carried out in accordance with the civil law, the law on enterprises, the law on real estate business and other regulations of law[12].

 

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 Article can be found here.

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[1] Article 46.1 of the Law.

[2] Article 48.1 and Article 48.2 of the Law:

“1. An investor shall terminate its/his/her investment activities and/or investment project in the following cases:

a) The investor decides to terminate the project;

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

c) The project duration is over.

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

a) The investor fails to overcome the difficulties that lead to project suspension in the cases mentioned in Clause 2 and Clause 3 Article 47 of this Law;

b) 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 the case specified in Point d of this Clause;

c) 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;

d) 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 the law on land;

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

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

g) Pursuant to a judgment or decision of a court or an arbitral award”.

[3] Article 24.2 of the Law:

“Foreign investors making investment by contributing capital, purchasing shares and purchasing stakes of business organizations must:

a) Ssatisfy market access conditions applied to foreign investors as prescribed in Article 9 of this Law;

b) Ensure national defense and security in accordance with this Law;

c) Comply with regulations of the law on land and conditions for receipt of land use rights and conditions for use of land on islands or border or coastal communes.

[4] Article 46.2(a) of the Law.

[5] Article 48.5 of the Decree.

[6] Article 48.6 of the Decree.

[7] Article 48.7 of the Decree.

[8] Article 48.8 of the Decree.

[9] Article 48.9 of the Decree.

[10] Article 48.10 of the Decree.

[11] Article 48.11 of the Decree.

[12] Article 46.2(b) of the Law.