Terminating Investment Projects: A Legal Guide

Terminating investment projects is a critical legal procedure that ensures investment activities are managed and compliant with the law. This guide details the regulations for terminating investment projects to provide investors with a clear understanding of the required procedures.

Cases for Terminating Investment Projects

The termination of an investment project is governed by Article 48 of the Law on Investment 2020. An investment project can be terminated either by the investor or by the Investment Registration Authority.

Termination by the Investor

An investor may initiate the process of terminating investment projects under the following conditions:

• The investor decides to terminate the project’s activities.
• Termination conditions specified in a contract or the enterprise’s charter are met.
• The project’s operational duration, as stated in the investment registration certificate, expires.

Termination by the Investment Registration Authority

The Investment Registration Authority may fully or partially terminate an investment project if:

• The project meets the conditions for suspension under the Law on Investment, and the investor fails to rectify these conditions.
• The investor fails to complete the project’s operational objectives within 24 months of the approved timeline without a valid extension.
• The investor loses the right to use the investment location and does not complete procedures to adjust the location within six months.
• The project has been inactive for 12 months, and the Investment Registration Authority cannot contact the investor or their legal representative.
• The project’s land is subject to recovery due to non-use or delayed use as per the land law.
• The investor fails to make a required security deposit or provide a guarantee for the deposit obligation.
• The investor engages in investment activities based on fictitious civil transactions.
• A legally effective court judgment or arbitral award mandates termination.

For projects subject to investment policy approval, the Investment Registration Authority will consult the approving agency before terminating investment projects.

Procedure for Terminating Investment Projects

The termination procedure is outlined in Clause 2, Article 57 of Decree 31/2021/ND-CP. The specific steps vary based on the termination scenario.

• Termination by Investor’s Decision: The investor must submit the termination decision and the Investment Registration Certificate (if any) to the Investment Registration Authority within 15 days.
• Termination by Contractual Conditions or Expiration: The investor must notify the Investment Registration Authority and return the Investment Registration Certificate (if any) with supporting documents within 15 days of termination.
• Termination by the Investment Registration Authority: The authority issues a termination decision and revokes the Investment Registration Certificate. The certificate becomes invalid on the effective date of the termination decision.
• For Projects with an Investment Certificate (also serving as Business Registration): The Investment Registration Authority issues a termination decision without revoking the certificate. The business registration content remains valid.
• For Projects with Land Recovery: The Investment Registration Authority issues the termination decision after the land recovery decision is made.

>>> See more at: Investment Project Registration Service in Vietnam

Liquidation After Terminating Investment Projects

According to Clause 4 and Clause 5, Article 48 of the Law on Investment 2020, investors self-liquidate project assets according to asset liquidation laws. The handling of land use rights and attached assets must comply with the land law.

The liquidation process under Clause 8, Article 57 of Decree 31/2021/ND-CP includes:

• Investors self-liquidate project assets according to regulations.
• For projects involving state-allocated or leased land, the handling of land use rights and attached assets follows the provisions of the land law.
• If the investor’s economic organization is dissolved or enters bankruptcy during liquidation, the process follows the laws on dissolution and bankruptcy.

Termination When the Investor is Unreachable

Article 58 of Decree 31/2021/ND-CP specifies the procedure when an investor cannot be contacted. The Investment Registration Authority will:

• Create a report documenting the project’s inactivity and the inability to contact the investor.
• Send a formal request to the investor’s registered address.
• After 30 days, request support from local authorities or the investor’s diplomatic mission in Vietnam.
• Publish a 90-day notice on the National Investment Portal.

If contact is not established within 12 months of inactivity, the authority will decide on terminating the investment project.

Other Termination Scenarios

• Fictitious Civil Transactions (Article 59, Decree 31/2021/ND-CP): The Investment Registration Authority will terminate a project based on a court ruling that declares an underlying civil transaction void.
• Court Judgment or Arbitral Award (Article 60, Decree 31/2021/ND-CP): The authority will execute the procedure for terminating investment projects based on a legally effective court judgment or arbitral award.

>>> See more at: Procedure for termination of household business operations

Consulting Services for Terminating Investment Projects

Long Phan Consulting Company provides comprehensive services for terminating investment projects. Our solutions include:

• Detailed consultation on termination conditions.
• Guidance on required documents and procedural steps.
• Review of the legal validity of all documentation.
• Drafting and preparation of the complete termination file.
• Acting as the authorized representative to submit files and liaise with authorities.
• Receiving and delivering results to the client.

With an expert team, Long Phan Consulting Company ensures the process of terminating investment projects is completed in compliance with regulations.

Frequently Asked Questions (FAQ)

How are project assets handled if the investor is unreachable?

The management of project assets follows the civil code’s provisions on managing the property of an absent person. Legal Basis: Clause 3, Article 58, Decree 31/2021/ND-CP.

What happens in a partial termination of an investment project?

The investor may continue the non-terminated portion of the project and must complete procedures to amend the investment project accordingly. Legal Basis: Clause 6, Article 57, Decree 31/2021/ND-CP.

How is termination handled if the economic organization also ceases operations?

The project is terminated according to Article 57 of Decree 31/2021/ND-CP, and the investor must terminate the economic organization’s operations under the relevant laws. Legal Basis: Clause 7, Article 57, Decree 31/2021/ND-CP.

Handling Disputes When Terminating Investment Projects Without Contacting the Investor?

Disputes over rights and obligations in such cases shall be resolved at Court or Arbitration under the parties’ agreement and Vietnamese law.

Legal Basis: Clause 5, Article 58, Decree 31/2021/ND-CP.

Is the Investment Registration Certificate revoked upon termination?

The Investment Registration Authority revokes the certificate when a project is terminated, except in cases of partial termination. Legal Basis: Clause 6, Article 48, Law on Investment 2020.

Conclusion

The procedure for terminating an investment project is not only a legal basis to conclude the implementation process but also a measure to ensure the lawful rights and interests of investors, the State, and related parties. For detailed consultation and assistance in carrying out the procedure promptly and in compliance with the law, please contact Long Phan Consulting via hotline: 1900636389 for dedicated and professional support.