The time limit for project completion set when foreign companies invest in a project in a foreign country. However, due to various reasons, foreign companies may not be able to complete the project within the scheduled time frame. In such cases, it becomes necessary to notify the concerned authorities about the delay and to ask for an extension of the project completion deadline. So, what should foreign corporations take into consideration to modify the deadline for executing an investment project in compliance with legal regulations?
Legal basis
The competent authorities required Foreign companies to inform in writing 15 days before the original deadline for project completion. In the notification, the foreign company needs to provide information about the investment project, along with revised timelines for completing it. You should send the notification to either the authority that issued the investment certificate or the authorized state management unit.
Article 3.4 of the 2020 Law on Investment defines an “investment project” as a proposal for utilizing mid-term or long-term capital to carry out investment activities in a specific administrative region over a specified period. During the course of such projects, investors in general and foreign investors specifically are authorized to modify investment projects.
If there is any change in capital contribution and raising schedule, the schedule for achieving the main operational objectives of the project, and the execution schedule for each stage (in case of multi-stage projects), the progress of each phase must be specified. Foreign companies must comply with the legal provisions for adjusting the extension of investment project execution. The modification of such projects essentially involves investors following the procedure to extend the implementation period from the time of approval of investment project guidelines to the project’s completion, operation, and usage.
The requirements for modifying the extension of executing an investment project.
Foreign companies that seek to modify the extension of executing an investment project must satisfy the following conditions to expedite the dossier approval and appraisal process:
Firstly, foreign investors must adhere to the procedure for approving the adjusted investment guidelines. As per Article 41.3.d of the Law on Investment 2020, if the duration of the project exceeds 12 months compared to the investment guideline’s initial written approval when adjusting the extension of the investment project, foreign companies must follow the investment guideline adjustment approval process. For foreign companies, it is not feasible to adjust the extension of the investment project execution when the total project duration exceeds 24 months compared to the investment guideline’s initial written approval. However, there are exceptions to this rule, such as:
+ An event of force majeure occurs and there is a need to mitigate its consequences in accordance with civil and land laws.
+ The State’s delay in allocating or leasing out land, or authorizing the land’s repurposing, impedes the investor.
+ The regulatory agency or State delays in performing administrative procedures.
+ When the regulatory agency revises the planning, it modifies the investment project.
+ If any of the objectives in the initial written approval for investment guidelines undergo a change or if a new objective is added, approval becomes necessary.
+ Modification of total investment capital by increasing or reducing it by 20% or more results in a change of investment project scale.
Secondly, foreign companies should ensure that the project’s implementation timeline complies with the investment registration certificate’s agreement.
Thirdly, foreign companies need to fulfill their obligation to report on the status of investment projects until the time of modification.
Fourthly, foreign companies should meet the requirements set out in the investment registration certificate.
The process of modifying the extension of executing an investment project
Foreign companies must comply with the regulations for adjusting investment guideline approvals, according to the approval competence defined in Articles 44, 45, and 46 of Decree 31/2021/ND-CP, when they adjust the extension of an endorsed investment project. They should follow the investor approval decision procedures or the investment registration certificate modification procedures, based on the approval decision for investment guidelines. They may undertake the following steps to modify the extension of the investment project execution:
Step 1:
Preparing the required dossier
The dossier should consist of the following documents, prescribed under Article 44.1 of the Law on Investment 2020:
+ An application form for modifying the extension of the investment project execution.
+ A report on the investment project’s status at the time of modification.
+ The investor’s decision on modifying the investment project.
+ Explanation or documentation relating to the changes in the aspects specified in Points b, c, d, dd, e, g, and h Clause 1 Article 33 of the Law on Investment (if relevant).
Step 2:
Submitting the application to the approved authority for processing
The authority for approving the investment guideline will be different depending on the investment project’s purpose. As a result, foreign companies should be aware of the investment registration authority that issued the original Investment Registration Certificate when submitting a registration file to extend the investment project execution timeframe.
Note:
If foreign companies neglect to execute the Investment Registration Certificate adjustment procedures when modifying the investment project and changing the Investment Registration Certificate’s content, they can face administrative sanctions ranging from VND 70,000,000 to VND 100,000,000.
Conclusion
In conclusion, foreign companies must follow specific guidelines when modifying the extension of executing an investment project. It is vital to ensure compliance with the regulatory agencies’ provisions and meet the requirements stated in the investment registration certificate. By adhering to the recommended procedures and fulfilling their obligations to report on the status of their investment projects up to the time of modification, foreign companies can avoid administrative sanctions and achieve a smoother and faster dossier approval and appraisal process.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
