Changes of law usually make enterprises and State authorities confuse during the course of adapting to new regulations which are still strange. Therefore, transitional provisions in recently effective Decree 31/2021/ND-CP (“Decree 31”), together with Law on Investment 2020 replacing Law on Investment 2014, will be an efficient “tour guide” assisting investors to navigate the right way during the period of transition with many notable instructions.

Enterprises continue to operate under unexpired certificate

Despite no longer being granted since the effective date of Law on Investment 2014, Investment License, Investment Incentives Certificate or Investment Certificate are still recognized. Accordingly, the relevant enterprises are fully entitled to the same rights, obligations and incentives without being required to change the old certificate into Investment Registration Certificate and/or Enterprise Registration Certificate. If the enterprises wish to change into the new certificates, the enterprises can concurrently request the authority to grant firstly new enterprise certificate and then investment certificate.

Moreover, when the investment project is terminated, the enterprises shall not be dissolved even such requirement is mentioned in the existing certificate according to the old regulations.

What are the investment conditions applied for project established under the old regulation?

Enterprises with dominant foreign capital established before 01 January 2021 shall satisfy the investment conditions under Law on Investment 2020 when: (1) amending the project; (2) supplementing business lines; (3) establishing other enterprises; (4) registering for contribution of capital or company acquisition (M&A) and (5) entering into Business Cooperation Contract (BCC).

Regarding amendment of investment project, it is noteworthy that authority shall review the amendment proposed without looking into other contents of the project. This is a “shield” for enterprises against over-the-limit requirements of the authority on out-of-scope explanation and demonstration which are quite common in practice.

Escrow agreement for investment can be amended under new law

For the projects requiring government’s support on land, the investor normally has to make a deposit to secure project implementation according to an escrow agreement with the State. Deposit made under old regulations is still valid. However, in order to put advantageous changes under Law on Investment 2020 into good use, the enterprises are entitled to request for the amendment of such escrow agreement to (1) change escrow method to form of bank guarantee or (2) amend conditions for receiving back the deposit. As a result, the enterprise’s financial resources can be enhanced due to the returned deposit.

It is noteworthy that this regulation shall be applied only to the remaining phase of project after 26 March 2021 and to outstanding deposit after amendment date of agreement. In addition, only the investors who do not violate their obligations of project implementation are eligible to make above requests.

Amendment of investment project in operation

Generally, the enterprises continue to implement the project for which the investment policy has been approved. If the project amendment makes such project is subject to approval according to new regulations, the prevailing procedures shall be applied. However, regarding amendment of (1) project is subject to the Prime Minister’s approval or (2) project over VND 5,000 billion and in accordance with plan which is previously approved by the provincial authority, the Prime Minister will approve matters within his/her power under current regulations while other issues are decided by the provincial authority.

Especially, amendment of project progress subject to approval is a remarkable good news for enterprises. Accordingly, the progress of all those projects, whether amended or not before 26 March 2021, will be “reset”. As a result, the project can last more for a maximum of 24 months from 01 January 2021 (if it is expected to end before 01 January 2021) or from the expected end date (if it is expected to end after 01 January 2021). In addition, although the Law on Investment 2020 provides that the project whose progress is prolonged more than 12 months shall obtain approval on amendment of investment policy, the investor is exempt from this procedure under Decree 31 if the prolongation is caused by force majeure or the State authorities’ fault. Transitional provisions on project amendment are quite complex, especially due to changes of approval authority. The investors should carefully learn Decree 31 before making any amendment for ensuring compliance with the laws and their legitimate interests.