Foreign companies contribute a significant part to the investment rate for investment projects within the territory of Vietnam. To implement investment projects, foreign companies shall comply with Vietnamese laws on investment in particular and WTO Commitments and international trade agreements on investment in general. During the implementation of the investment project, there may arise the case of changes in the extension of the investment project execution, foreign companies need to adjust the extension of the investment project execution. So, what should foreign companies pay attention to adjust the extension of the investment project execution in accordance with the provisions of law?
As per the provisions of Article 3.4 of the Law on Investment 2020, “Investment project” means the collection of proposals for the expenditure of mid-term or long-term capital to carry out investment activities in a particular administrative division over a certain period of time. During the implementation of an investment project, investors in general or foreign investors in particular have the right to adjust investment projects.
Provided that there is any change in (i) capital contribution and capital raising schedule; or (ii) schedule of achievement of primary operational objectives of the investment project, execution schedule of each stage (if the project is divided into multiple stages), the progress of each stage must be prescribed[1], foreign companies must carry out procedures for adjusting the extension of the investment project execution in accordance with the law on investment. The adjustment of the extension of the investment project execution is basically the investor carry out the procedure for extending the implementation time of an investment project as per regulations from the time the investment project guidelines are approved to the time of completion, exploitation and use of the project.
Conditions for adjusting the extension of the investment project execution
Foreign companies who adjust the extension of the investment project execution should meet the following conditions so that the process of approval and appraisal of dossiers will be conducted faster:
Firstly, foreign investors need to carry out procedures for approving the adjustment to the investment guidelines. According to the provisions of Article 41.3.d of the Law on Investment 2020, in case of adjusting the extension of the investment project execution but the total duration of the project exceeds 12 months compared to that stated in the first written approval for investment guidelines, foreign companies must carry out the procedures for approving the adjustment of investment guidelines. However, foreign companies are not allowed to adjust the extension of the investment project execution but when total duration exceeds 24 months compared to that stated in the first written approval for investment guidelines, except for one of the following cases[2]:
- It is necessary to remedy the consequences of an event of force majeure in accordance with civil law and land law;
- The extension of the investment project execution is adjusted due to the State delays allocating or leasing out land to the investor or allowing the investor to repurpose land.
- The extension of the investment project execution is adjusted at the request of a regulatory authority or the State authority delays in performing administrative procedures;
- The investment project is adjusted since the regulatory agency changes the planning;
- Any objective specified in the written approval for investment guidelines is changed; any objective that is subject to approval for investment guidelines is added;
- The total investment capital is increased or reduced by 20% or more, thereby changing the scale of the investment project.
Secondly, foreign companies must ensure the time to implement the project in accordance with the execution committed in the investment registration certificate;
Thirdly, foreign companies need to fulfil their obligations to report on the implementation of investment projects up to the time of change;
Fourthly, foreign companies need to meet the conditions specified in the investment registration certificate.
The procedure to adjust the extension of the investment project execution
For projects that have been approved for investment guidelines, foreign companies when adjusting the extension of the investment project execution should carry out procedures for adjusting the Decision on approval for investment guidelines in accordance with regulations corresponding to the competence to approve investment guidelines of all levels laid down in Articles 44, 45 and 46 of Decree 31/2021/ND-CP. Pursuant to the Decision on approval for investment guidelines, foreign companies shall follow procedures for adjusting the Investor Approval Decision or Investment Registration Certificate[3].
Foreign companies may refer to the following steps to adjust the extension of the investment project execution:
Step 1: Preparing dossiers
Dossiers to adjust the extension of the investment project execution as prescribed in Article 44.1 of the Law on Investment 2020 include:
- An application form for adjustment of the extension of the investment project execution;
- A report on investment project’s progress by the time of adjustment;
- The investor’s decision on investment project adjustment;
- Explanation or documents relating to the adjustment of the contents specified in Points b, c, d, dd, e, g and h Clause 1 Article 33 of the Law on Investment (if any).
Step 2: Submitting the application to the competent authority for settlement
Depending on the purpose of the investment project, the authority to approve investment guidelines of the State authority will be different, foreign companies should pay attention to the investment registration authority that has issued the initial Investment Registration Certificate to submit a dossier of registration to adjust the extension of the investment project execution.
Of note: in case the foreign companies fail to carry out the procedures for adjustment of the Investment Registration Certificate in case the adjustment of the investment project changes the contents of the Investment Registration Certificate, the foreign companies may be sanctioned for administrative violations from VND 70,000,000 to VND 100,000,000.
Above is the general content of adjusting the extension of the investment project execution. If you have difficulty in finding a Law Firm to advise and support in legal aspect related to the banking practice, please contact us.
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[1] Article 40.8 of the Law on Investment 2020
[2] Article 41.4 of the Law on Investment 2020
[3] Article 43.2 of Decree No. 31/2021/ND-CP
