When intending to make a serious and long-term investment in Vietnam, foreign investors often find out how to get an Investment Registration Certificate (the “IRC”). Another equally important issue is the cases in which the State authorities of Vietnam revoke this license. The revocation of the license is clearly a risk that greatly affects the business plan, money, and effort of foreign investors. BLawyers Vietnam would like briefly to discuss this issue.
I. 07 cases of revocation of IRC
The investment registration authority will revoke the IRC in case the investment project terminates its operation, specifically as follows:
- The investment project falls into one of the cases where the investment project’s operation is stopped by the state management authority in charge of investment/the Prime Minister and the investor is unable to remedy the conditions of suspension;
- 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;
- After 12 months from the date of suspension of the project, the investment registration authority cannot contact the investor or the investor’s legal representative;
- The investment project is subject to land recovery due to the failure to put the land to use, or the delay in putting the land into use according to the provisions of the law on land;
- The investor fails to pay the deposit or obtain a bank guarantee as prescribed by law if project execution security is required;
- The investor conducted the investment activities based on fake civil transactions in accordance with the provisions of civil law; and
- Under a judgment or decision of a court or an arbitral award.
II. Authorities having the competence to revoke IRC
The investment registration authority mentioned in Section I above includes:
- The Management Boards of industrial parks, export processing zones, hi-tech zones, and the economic zone shall revoke the IRC about the investment projects located therein, except for cases under the authority of the investment registration authority where the investor implements the project.
- The Department of Planning and Investment shall revoke the IRC for investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones, except for cases under the authority of the investment registration authority where the investor implements the project.
- The investment registration authority where the investor implements the investment project, locates or plans to set up an executive office to implement the investment project shall revoke the IRC for the following investment projects:
- Investment projects implemented in at least 02 provinces;
- Investment projects implemented inside and outside industrial parks, export processing zones, high-tech zones, and economic zones;
- Investment projects in industrial parks, export processing zones, hi-tech zones, and economic zones where the management board of industrial parks, export processing zones, hi-tech zones, and economic zones have not yet been established or which are not under the management of the Management Boards of the industrial park, export processing zone, hi-tech zone or economic zone.
III. Actions to do after the IRC has been revoked
After the IRC is revoked, the enterprise will carry out the liquidation of the investment project as follows:
- Investors liquidate the investment project by themselves in accordance with the law on asset liquidation;
- For investment projects that are allocated or leased land by the State or permitted to change the land use purpose, the investors shall comply with the handling of land use rights and land-attached assets in accordance with regulations of the law on land and related laws.
Of note, in the process of liquidation of an investment project, if the investor being an economic organization is dissolved or falls into bankruptcy, the liquidation of the investment project shall comply with the provisions of the law on liquidation/ bankruptcy of economic organizations.
Date: 14 November 2022
Writer: Tuyen Pham
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