Issue 021123 – Procedures for terminating outbound investment projects

Dear Valued Clients,

Over the past decade, policies to support and encourage businesses to invest abroad have been increasingly improved. This has created favorable conditions to expand investment and business activities, improve competitiveness and increase the rate of participation in the international integration process for domestic enterprises. However, for many different reasons, including internal problems within the project and pressure from external factors, many businesses have had to decide to terminate their outbound investment projects.

This article will delve into the analysis of cases of termination of investment activities abroad according to Vietnamese law and provide customers with documents, order and procedures for implementing the procedures to terminate investment projects abroad.

Below is our article on this issue. We hope the information provided will give you a comprehensive overview of this issue and will help your future business activities.

1. Cases of termination of an investment project abroad

According to Article 64 of Law on Investment 2020, outbound investment projects are terminated in the following cases:

(1)      The investor decides to terminate the project;

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

(3)      The investment project duration is over in accordance with regulations of law of the host country

(4)      The investor transfers all outbound investment capital to foreign investors;

(5)      The investor fails to execute or is unable to execute the investment project in line with the schedule registered with the regulatory agency within 24 months from the date of issuance of the Outbound Investment Registration Certificate and fails to follow the procedures for adjusting the execution schedule of the investment project;

(6)     The foreign business organization is dissolved or goes bankrupt in accordance with the law of the host country;

(7)     According to a judgment or decision of a court or an arbitral award.

2. Process for liquidation of foreign assets and transferring assets to Vietnam

Because the application for termination of overseas investment activities in Vietnam requires documents proving that assets have been liquidated abroad and transferred back to Vietnam, investors first need to carry out this procedure as well as procedures for terminating investment in the host country. Accordingly, Article 86 of Decree 31/2021/ND-CP stipulates that after the investment project is terminated, the liquidation thereof shall be carried out as follows:

(1)      After terminating investment activities, the investor must liquidate their investment project in accordance with laws of the host country.

(2)      Within 06 months from the date on which the tax finalization report or another equivalent document is available according to the laws of the host country in connection with the liquidation of the investment project, the investor must repatriate all proceeds from the project liquidation.

(3)      If the investor wishes to extend the time limit specified in Clause 2 of this Article, at least 15 days prior to the expiration date, the investor shall submit an application form specifying the reasons to the Ministry of Planning and Investment for consideration and decision. The extension shall be granted only once for a period not to exceed 06 months. Within 15 days from the receipt of the application form, the Ministry of Planning and Investment shall give the investor a written response to the extension.

(4)      Within 60 days from the date of completing the project liquidation and repatriation of proceeds from the liquidation (if any), the investor shall follow procedures for invalidating the Outbound Investment Registration Certificate.

3. Applications for invalidation of Outbound Investment Registration Certificates

According to Article 87.1 of Decree 31/2021/NDCP, the investor shall submit 02 sets of the application for invalidation of the Outbound Investment Registration Certificate (including 01 original dossier). An application includes:

(1)      An application form for invalidation of the Outbound Investment Registration Certificate;

(2)     Originals of issued Investment Registration Certificates;

(3)     Decision on termination of outbound investment project corresponding to the regulations set out in Article 59 of Law on Investment;

(4)     Documents proving that the investor has completed the project termination and liquidation, and repatriation of proceeds from the project termination and liquidation as prescribed in Article 85 hereof;

(5)     Document about the investor’s legal status.

4. Procedures for Invalidation of Outbound Investment Registration Certificates

According to Article 87 of Decree 31/2021/NDCP, the procedures for invalidation of Outbound Investment Registration Certificates are executed as follows:

(1)      The investors submit the documents listed in section 2 to the Ministry of Planning and Investment:

(2)      The Ministry of Planning and Investment shall inspect the validity of the application. If the application is invalid or has to be clarified, the Ministry of Planning and Investment shall request the investor in writing to complete it.

(3)      The Ministry of Planning and Investment shall send a written request for opinions to the State Bank of Vietnam about the investor’s foreign exchange transactions; compliance with regulations of law on foreign exchange by the investor, violations and imposition of penalties therefor within its power (if any);

(4)      Within 15 days from the receipt of the valid application, the Ministry of Planning and Investment shall issue an invalidation decision and revoke the outbound investment registration certificate.

Important note:

– If the outbound investment project is terminated as the investor transfers all outbound investment capital to a foreign investor, prior to the transfer of entire outbound investment capital to the foreign investor and the project termination, the investor must notify the State Bank of Vietnam.

– If the outbound investment project is terminated as the investor fails to execute or is unable to execute the investment project in line with the schedule registered with the regulatory agency within 24 months from the date of issuance of the outbound investment registration certificate and fails to follow the procedures for adjusting the execution schedule of the investment project, but the investor also fails to follow procedures for invalidating the Outbound Investment Registration Certificate, the Ministry of Planning and Investment, in accordance with Decree 31/2021/NDCP, shall:

• Decide to invalidate the Outbound Investment Registration Certificate and send the invalidation decision to the investor and regulatory bodies concerned.
• After the Outbound Investment Registration Certificate is invalidated, if the investor wishes to continue to execute the outbound investment project, such investor shall follow procedures for issuance of the Outbound Investment Registration Certificate as prescribed by Law on Investment and Decree 31/2021/NDCP.

– For a project subject to approval for its outbound investment guidelines, the investor and authority deciding the outbound investment shall terminate it and notify the authority or person that has the power to approve outbound investment guidelines.

As always, we hope you find this Legal Article useful and look forward to working with you in the future.

Kind regards,

ENT LAW LLC

The full version of this Legal Article can be found here.