In many cases, an investment project may be terminated either at the investor’s request or upon the request of the investment registration authority. In such circumstances, the investment registration authority will issue a decision to terminate the investment project. So, under what circumstances will a termination decision of an investment project be issued? What should investors do afterward? Let’s explore this with NPLaw in the article below.
1. When is a termination decision of an investment project made?
1.1. Cases where investors terminate their investment projects
According to Clause 1, Article 48 of the Law on Investment 2020, an investor may terminate an investment project in the following cases:
- The investor decides to terminate the investment project;
- It is based on conditions for termination specified in the contract or in the company's charter;
- The project’s operation term has expired.
As stipulated in Article 44 of the Law on Investment 2020, the operation term of an investment project in an economic zone shall not exceed 70 years, and outside an economic zone shall not exceed 50 years. Projects implemented in areas with difficult or extremely difficult socio-economic conditions or large-scale investment projects with slow capital recovery may be granted a longer term, but not exceeding 70 years. Upon the expiration of such a term, the investor must proceed with procedures for terminating the investment project.
1.2. Cases where the investment registration authority terminates the investment project
Under Clause 2, Article 48 of the Law on Investment 2020, the investment registration authority may terminate or partially terminate a project’s operation in the following cases:
- The investment project falls into one of the following situations that are decided to be suspended or partially suspended by the State management agency for investment, and the investor fails to rectify the reasons for suspension:
+ To protect relics, antiques, national treasures in accordance with the Law on Cultural Heritage;
+ To remedy violations of environmental protection laws at the request of environmental authorities;
+ To implement measures ensuring labor safety as requested by labor management authorities;
+ Pursuant to a court judgment or arbitral award;
+ The investor fails to comply with the contents of the investment policy approval or the Investment Registration Certificate, and has been administratively sanctioned but continues to violate;
+ The Prime Minister decides to suspend or partially suspend the investment project when its implementation harms or potentially harms national defense and security, as proposed by the Ministry of Planning and Investment.
- The investor is no longer permitted to use the investment location and does not implement procedures to adjust the investment location within 06 months from the date the location is no longer permitted to be used, unless the project falls under land recovery provisions for not using or delaying the use of land under land law;
- The investment project has been suspended its operations, and after 12 months from the date of suspension, the investment registration authority cannot contact the investor or their legal representative;
- The project is subject to land recovery due to failure to use or delayed use of land in accordance with land laws;
- The investor fails to make a deposit or obtain a guarantee of the deposit obligation for projects that require such assurance under the law;
- The investor implements the project based on a sham civil transaction, as defined under civil law;
- Pursuant to a court judgment or arbitral award.
In cases of termination upon the investment authority's request, the authority will issue a decision to terminate the investment project and concurrently revoke the Investment Registration Certificate (IRC), if applicable. The Investment Registration Certificate becomes invalid as of the effective date of the termination decision.
2. Types of termination decisions of investment projects
According to the Law on Investment 2020, there are two types of investment termination decisions:
- Decision on partially terminating the investment project
If the investor or the investment registration authority decides to partially terminate the operation of an investment project under Clauses 1 and 2, Article 48 of the Law on Investment 2020, the investor may continue implementing the remaining portion of the project. At the same time, they must proceed with amending the investment project in accordance with Articles 44, 45, 46, and 47 of Decree 31/2021/ND-CP.
- Decision on fully terminating the investment project
After the full termination decision is issued, the investor must implement the liquidation of the investment project in accordance with legal regulations.
3. Required contents of decisions to terminate investment projects
A decision to terminate an investment project must contain the following:
- Information on the investment project, including:
+ Project name and code;
+ Investment Registration Certificate/Investment Certificate/Investment License;
+ Business License;
+ Investment Policy Decision.
- Reason for terminating all or a portion of the project;
- A portion of the project being terminated (if applicable) and another one that continues to operate;
- Responsibilities of the investor;
- Effective date of the decision.
4. Common post-termination tasks
After an investment project is terminated, the enterprise must complete the following tasks:
According to Clause 8, Article 57 of Decree 31/2021/ND-CP, the investor must liquidate the investment project as follows:
- The investor shall self-liquidate the investment project in accordance with laws on asset liquidation;
- For projects where the State allocated or leased land, or permitted land-use conversion, the handling of land use rights and assets attached to the land shall comply with land laws and relevant legislation;
- During the liquidation process, if the investor (as an economic organization) is dissolved or goes bankrupt, the liquidation shall be conducted in accordance with laws on dissolution and bankruptcy of economic organizations.
5. Legal consulting services for termination decisions of investment projects
As a professional legal consulting firm in the field of investment, NPLaw provides clients with the following services related to investment project termination:
- Providing legal advice on the latest regulations concerning the termination of investment project activities;
- Assistance in drafting lawful and protective documents for project termination to ensure the investor’s best interests;
- Advising on the liquidation process of investment projects post-termination;
Representing clients in negotiations and dispute resolution relating to project termination activities, aiming to protect clients’ lawful rights and interests.
