An investment project is a set of proposals for the expenditure of mid-term or long-term capital to conduct business and investment activities in a specific area, within a specified period of time. However, in some situations, investors must cancel their investment projects. Accordingly, the cancellation of an investment project was specifically stipulated in the Law on Investment 2005, but not in 2020. For clearly understanding this matter, NPlaw would like to present you with the following important information.
I/ Common cases of the investment project cancellation
Cases of the investment project cancellation include:
- A project is suspended for too long which has had an investment decision but an investor does not implement the project or an owner does not do so without a written approval of the competent authority.
- Change in a project’s purpose without written permission from the competent authority.
- A project is overdue and not feasible.
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II/ Conditions for the cancellation of an investment project
There is no written regulation on the cancellation of an investment project. However, it is also considered one of the forms of the termination of an investment activity, so a project will be canceled when it meet the conditions like the termination cases of investment projects in Article 48 of the Law on Investment 2020, namely:
- An investor terminates an investment activity and an investment project in the following cases:
+ An investor decides to terminate investment project’s activities;
+ Termination in accordance with the conditions specified in the Contract, Corporate Charter;
+ An investment project has expired.
+ The Investment Registration Agency terminates an investment project in part or in full in the following cases:
+ An investment project falls under one of the cases specified in Clause 2 and Clause 3 of Article 47 of this Law where an investor fails to overcome the difficulties resulting in project suspension;
+ An investor isn’t allowed to continuously use the investment location and does not implement the procedures for adjusting the investment location within 06 months from the date on which such an investor is no longer allowed to use the investment location, except for the cases prescribed in Point d of this Clause;
+ An investment project has ceased operations and expired 12 months from the date of its cease, the Investment Registration Agency cannot contact an investor or its legal representative;
+ An investment project is subject to the land acquisition due to not putting land into or slowly putting land into use plan in accordance with the Law on Land;
+ An investor do not margin or have no guarantee of margin obligations in accordance with the Law for investment projects subject to implementation guarantees;
+ An investor implements investment activities based on shame civil transactions in accordance with the Civil Law;
+ According to the verdict, the court's decision and the arbitration award.
III/ Regulations on the cancellation of an investment project
Pursuant to Article 72 of the Law on Investment 2005, the regulations on the modification of contents, postponement, suspension and cancellation of an investment project are as follows:
- In case of the modification of contents of an investment project, an investor must clearly explain the reasons and modified contents to be submitted to the competent State agencies in considering and deciding the investment; if a project is being implemented, the investor must make an assessment report of such a project;
- An investor is only allowed to set up, verify, submit and approve a project in accordance with regulations after receiving a written modification proposal for project‘s contents by the competent State agency;
- An investment project is postponed, suspended or canceled in the following cases:
+ After twelve months from the date of the investment decision, an investor does not implement its project without the written approval of the competent authority;
+ Change in project’s purposes without written permission from the competent authority.
+ The competent authority that decides to postpone, suspend or cancel an investment project must clearly identify the reasons and take responsibility before the law for its decision.
However, the above regulations are for reference only because the Law on Investment 2005 expired and the Law on Investment 2020 does not mention the cancellation of an investment project and written regulation on this content has not been issued yet.
IV/ Procedures for the cancellation of an investment project
The procedures for the cancellation of an investment project is based on the procedures for terminating an investment project under Article 48 of the Investment Law 2020 and is guided by Article 57 to Article 60 of Decree 31/2021/ND-CP, specifically:
- Step 1: An investor submits requests and decisions to cancel an investment project to the Investment Registration Agency attached with the Investment Registration Certificate and related documents proving the cancellation of such an investment project is necessary.
- Step 2: The agency receives documents to consider and process requests and decides for canceling such an investment project.
- Step 3: After requests and decisions for the cancellation of an investment project have been approved as well as the Investment Registration Certificates have been revoked, such an investor liquidates its investment project.
Note: Within 15 days from the date of termination of investment project activities, the investor should notify or send the decision to terminate investment project activities to the Investment Registration Agency.
V/ Important notes when canceling an investment project
It should be noted when canceling an investment project to:
- Make sure that the request to cancel the investment project is subject to the case of termination of the investment project subscribed by the law.
- After receiving the approval of the request to cancel the investment project, the liquidation of the investment project will be implemented in accordance with the Law on the liquidation of assets and related Laws. For investment projects with land allocated, leased and allowed to change land use purpose by the State, the process of land use rights and property associated with land is implemented in accordance with the Law on land and relevant legislation. In the process of liquidation of the investment project, if the investor is an economic organization dissolved or falls into bankruptcy, the liquidation shall comply with the Law on dissolution and bankruptcy of economic organizations.
- Consider the time to send notifications or decisions to the investment registration agency on the cancellation of the project to avoid exceeding the specified time without sending notifications that will be seen as fines.
VI/ How is the cancellation of a violated investment project handled?
The cancellation of a violated investment project is considered a violation of investment activities, specifically stipulated in Clause 2 and Clause 3 Article 15 of Decree 122/2021 / ND-CP as follows:
A fine of between 30,000,000 VND and 50,000,000 VND for one of the following acts:
- Failing to make a report of investment activity or make a report not on time as prescribed;
- Making a report of investment activity with dishonesty and inaccuracy;
- Do not send notification documents to the Investment Registration Agency where the executive office is located within 07 working days from the date of the decision on termination of its operation of the foreign investor in the BCC contract;
- Do not sending notifications to the Investment Registration Agency within 05 working days from the date of the decision on termination of the investment project;
- Do not notify or send a decision on termination of the investment project to the Investment Registration Agency within 15 days from the date of termination thereof.
Thus, when canceling the investment project, the investor must send a notice or decision on termination of the investment project to the Investment Registration Agency within 15 days from the date of termination thereof, if not, he/she will be fined from 30,000,000 VND to 50,000,000 VND. At the same time, as a measure to address this consequence, it is forced to send a notice or decision to terminate the investment project to the Investment Registry.
VII/ Investment project cancellation consultancy service
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