Violations of investment regulations are a serious issue, undermining transparency and efficiency in the investment environment. Although the law has clearly stipulated relevant provisions, infractions such as document fraud, investment in prohibited sectors, or tax evasion still occur. The following article, presented by NPLaw, aims to explore legal issues related to violations against investment regulations. 

I. Current situation of violations against investment regulations 

At present, violations of investment regulations pose a significant concern in Vietnam’s investment landscape. The most common infractions include fraudulent documents during investment procedures, investment in prohibited or restricted sectors, and failure to comply with reporting and financial obligations. Moreover, unauthorized investments in sensitive sectors such as national security, environmental protection, or industries expressly prohibited by law have become increasingly prevalent.

Failure to fulfill investment commitments or violations of environmental protection obligations further aggravate the situation. Despite ongoing efforts by competent authorities to manage and sanction these violations, the issue remains widespread, necessitating stronger and more resolute enforcement measures to safeguard a transparent and equitable investment environment.

II. Legal framework governing violations against investment regulations 

1. What constitutes a violation against investment regulations?

A violation of investment regulations refers to any act by an investor that fails to comply with the legal provisions on investment, resulting in adverse impacts on project operations or infringement of the lawful rights and interests of related parties.

2. Common areas of violations against investment regulations 

Investment violations commonly arise in the following areas:

  • Fraudulent or false investment documents;
  • Investment in sectors that are prohibited or subject to restrictions;
  • Breach of reporting obligations or failure to comply with requests from regulatory authorities;
  • Unauthorized or improperly conducted investment activities;
  • Tax evasion or violation of tax-related obligations;
  • Non-compliance with environmental regulations.

3. Sanctions for violations against investment regulations 

Sanctions for violations of investment regulations are clearly provided in Article 3 of Decree No. 122/2021/ND-CP on administrative fines in the field of investment. The primary forms of sanction include:

  • Warning;

  • Monetary fine.

In addition to these principal sanctions, organizations or individuals may be subject to one or more remedial measures, depending on the severity of the violation.

III. Questions on violations against investment regulations 

1. Under what circumstances are violations subject to criminal prosecution?

Investment-related violations may be subject to criminal prosecution when the infringing acts are serious enough to disrupt economic or financial order, or harm the interests of the State, organizations, or individuals. These may include:

  • Violations concerning construction investment (Article 224 of the Penal Code 2015, as amended in 2017), such as unauthorized or fraudulent investments;
  • Money laundering activities (Article 324 of the Penal Code 2015, as amended in 2017).

If such acts cause substantial damage or destabilize the national economy, criminal liability may be pursued.

2. How are party members disciplined for violations against investment regulations ?

According to Article 40 of Regulation No. 69-QD/TW, disciplinary measures for Party members violating investment or construction regulations are classified into three levels:

  • Reprimand: Applied for violations of regulations on construction investment management and construction order but causing less serious consequences, such as construction in violation of planning, violation of boundary markers, construction without permission, not ensuring safety or advising on inappropriate investment policies.
  • Warning or Dismissal (if holding a position): Applied for repeat offenses or serious first-time violations, such as improper approvals, obstruction of investment processes, bidding violations, improper appraisal or disbursement, or substandard construction leading to collapse or waste.
  • Expulsion: Applied when violations cause particularly serious consequences or involve collusion, disclosure of bidding information, abuse of influence, or misreporting that causes significant damage to the Party, State, or enterprises.

These disciplinary actions are essential for preventing abuse of power, corruption, and misconduct, thereby upholding order and supporting sustainable economic development.

3. What should investors note to avoid violating investment regulations?

To prevent violations, investors should pay close attention to the following:

  • Complete all required investment registration procedures and obtain the Investment Registration Certificate from the competent authority before project implementation. Ensure that the project is executed according to the registered plan and within the prescribed timeline;
  • Fulfill all financial obligations to the State, including taxes, fees, and social insurance. Settle obligations with partners, clients, and employees to avoid disputes;
  • Comply with all environmental protection requirements, including environmental impact assessments and pollution mitigation measures;
  • Ensure lawful and proper use of land in accordance with land legislation;
  • Conduct transparent and lawful investment transactions; avoid sham civil transactions or misrepresented investment purposes;
  • In cases of project transfer or liquidation, complete all legal procedures and obtain approval from the competent State authority. Recovery and liquidation of project assets must comply strictly with legal provisions.

In summary, strict compliance with legal requirements on investment registration, financial obligations, environmental protection, land use, and contractual commitments is essential. Transparency in transactions and sound project management will help investors avoid potential violations.

4. Are individuals who violate investment regulations prohibited from future investment?

Currently, there are no explicit provisions permanently prohibiting individuals who violate investment regulations from future investments. However, depending on the seriousness of the violation, individuals may face administrative sanctions or operational restrictions for a certain period. Severe infractions may also lead to stricter oversight measures in the future.

5. Can enterprises be subject to business license revocation for violations against investment regulations?

According to Clause 1, Article 212 of the Law on Enterprise 2020, an enterprise may have its Enterprise Registration Certificate revoked in the following cases:

  • The enterprise's registration documents contain false information;
  • The enterprise is established by persons prohibited from forming enterprises under Clause 2, Article 17 of the Law on Enterprise 2020;
  • The enterprise ceases business operations for one year without notifying the business registration and tax authorities;
  • Failure to submit mandatory reports as required by law;
  • Other cases as decided by a court or upon request from a competent authority.

Therefore, if the enterprise engages in investment violations, such as failing to honor investment commitments and regulations, late reporting, or submitting fraudulent documents, it may face revocation of its Enterprise Registration Certificate and business license.

IV. Legal consultancy services on violations against investment regulations

The above article is provided by NPLaw on the topic of investment regulation violations. With a team of experienced lawyers and legal specialists, NPLaw is committed to offering dedicated legal consultation and assistance to clients facing issues related to investment compliance. For further legal support, please contact us at: