Revocation of Investment Certificate when terminating investment project in Vietnam

At present, regulations on the termination of investment project and revocation of Investment Certificate have been covered and governed by the Investment Law 2014 and Decree 118/2015/ND-CP (“Decree 118”) superseding Investment Law 2005 and Decree 108/2006/ND-CP (“Decree 108”). In this article, Luat Viet Advocates and Solicitors is going to focus on the revocation of Investment Certificate concurrently served as the Business Registration Certificate when terminating investment project in Vietnam.

Validity of Investment Certificate

As prescribed in Article 50, Investment Law 2005 about procedures for investment involving establishment of economic organization, foreign investors would be issued Investment Certificate concurrently served as the Business Registration Certificate:

  1. Foreign investors investing in Vietnam for the first time must have an investment project and perform the procedures for investment registration or evaluation of investment at the State administrative body for investment in order to be issued with an investment certificate. The investment certificate shall also be the business registration certificate.
  2. Where an economic organization with foreign invested capital which has been established in Vietnam has a new investment project, it shall be permitted to conduct procedures to implement such investment project without the requirement to establish a new economic organization.

Meanwhile, as regulated in Clause 1 Article 22 of Investment Law 2014 about investment in establishment of a business organization, foreign investors will be granted Investment Registration Certificate for the investment project, and Enterprise Registration Certificate later for the business organization established for operation of investment project:

  1. Investors may establish business organizations in accordance with law. Before establishing a business organization, the foreign investor must have an investment project and apply for a Certificate of investment registration following the procedures in Article 37 of this Law, and satisfy the following conditions

The difference on the above-mentioned regulations between Investment Law 2005 and Investment Law 2014 in relation to license for investment project and business organization has resulted in the difference in current regulations on revocation of these licenses between enterprises operating under Investment Certificate and those under Investment Registration Certification, which will be specified as follows.

Project termination and Investment Certificate revocation

Clause 1 Article 48 of Investment Law 2014 specifies basis resulting in termination of investment project activities, wherein under the decision of the registry office, including:

  1. 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;
  2. The land of the project is withdrawn by the State, or the investor is  not permitted to keep using the premises and fails to complete procedures for change of project location within 06 months from the day on which the decision on land/premises withdrawal is issued;
  3. The registry office cannot contact the investor or the investor’s legal representative after 12 months from the date of suspension of the project;
  4. The investor fails to execute or is not able to execute the project after 12 months according to the schedule registered with the registry office and is not permitted to extend the project execution schedule as prescribed in Article 46 of this Law;

Accordingly, registry office shall decide termination of investment project activities concurrently REVOKE Investment Registration Certificate if the investment project has been granted an Investment Registration Certificate. Investment Registration Certificate shall be invalid from the effective date of the decision on project termination [Item c, Clause 2, Article 41 of Decree 118].

Whereas, with regard to investment projects operating under Investment Certificate (also the Business Registration Certificate), the registry office shall decide termination of investment project activities WITHOUT REVOKING Investment Certificate (also the Business Registration Certificate). In this case, the business registration information on the Investment Certificate (also the Business Registration Certificate) is still effective [Clause 3, Article 41 of Decree 118].

In spite of the superficially different provisions between Item c, Clause 2 (revoking the Investment Registration Certificate only) and Clause 3 (not revoking the Investment Certificate concurrently keeping validity of business registration information) in Article 41 of Decree 118, these regulations express the constant opinion of legislators on maintaining the operation of business organization. Because both Investment Law 2005 and Investment Law 2014 allow a business organization to implement more than one investment project, which contributes to the fact that when one project is terminated, there are still other project(s) to be executed and kept operating.

From our practice experience, when terminating investment projects [operating under Investment Certificate (also the Business Registration Certificate)], the registry office shall still revoke the Investment Certificate by a decision on revocation. Nevertheless, the business registration information shall be defined as still effective in such decision.

Therefore, investor granted Investment Certificate (also the Business Registration Certificate) should carry out the procedures on splitting Investment Certificate into Investment Registration Certificate and Enterprise Registration Certificate. Accordingly, as the case happens, the competent authority shall revoke the Investment Registration Certificate in accordance with current law while the Enterprise Registration Certificate is still effective for the operation of enterprise on other investment projects. Moreover, foreign investors should initiatively consult lawyers or registry offices about the procedures of revoking Investment Certificate as well as recording the validity of business registration information or splitting Investment Certificate into Investment Registration Certificate and Enterprise Registration Certificate to keep the investment operation in Vietnam.