During the implementation of investment projects in Vietnam, foreign-invested companies in Vietnam may encounter certain difficulties or force majeure reasons leading to the decision to suspend operations of investment projects. In case the suspension of the project leads to a foreign-invested company having to suspend doing business, the enterprise must carry out at least two procedures, including procedures for temporary suspension of business according to enterprise law and procedures for suspension of investment projects according to investment law. In order for foreign-invested companies to better understand the procedures on this issue, the article below will clarify the necessary procedures when suspending project operations of a foreign-invested company according to the law of Vietnam.
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Time limit for suspension of project operations of a foreign-invested company
According to Article 56.2 of Decree 31/2021/ND-CP detailing and guiding a number of articles of the Law on Investment, the total period of suspension of an investment project is no more than 12 months, except for cases suspension of an investment project in accordance with a court judgment, decision, effective arbitration award or decision of state management authorities on investment, the project’s suspension period is determined according to court judgments, decisions, arbitration awards or decisions of state management authorities on investment. The Law on Enterprise 2020 does not limit the number of temporary business suspensions of an enterprise, but the duration of each temporary business suspension must not exceed one year[1].
Therefore, the time limit for each temporary suspension of operations of a foreign-invested company is no more than 12 months.
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Procedures that need to be conducted when a foreign-invested company suspend the project operations
According to Article 47.1 of Law on Investment 2020 and Article 206.1 of Law on Enterprise 2020, when suspending the operations of an investment project and temporarily suspending business, foreign-invested companies must carry out procedures for suspension operations of investment projects and procedures for notification in writing to the competent Business Registration Authority.
Procedures for suspending operations of investment projects
In case a foreign-invested company decides to suspend operations of an investment project according to Article 47.1 of Law on Investment 2020, the foreign-invested company sends a notice to the Investment Registration Authority within 05 working days from the date of the decision. The Investment Registration Authority will receive and notify the suspension of the investment project to relevant authorities.
Procedures for notification of temporary business suspension
A foreign-invested company that temporarily suspends business must notify and send an application for registration of temporary business suspension to the Business Registration Authority where the foreign-invested company is headquartered, no later than 03 working days in advance before the date of temporary suspension of business. In case an enterprise wishes to continue temporarily suspending business after the end of the notified period, it must notify the Business Registration Authority at least 03 working days before the date of continued temporary suspension of business.
After receiving the application for registration of temporary business suspension from the foreign-invested company, within 03 working days, the Business Registration Authority will issue a receipt, and then check the validity of the application and issue a document confirming that the foreign-invested company has registered to temporarily suspend business. The Business Registration Authority will then update the legal status of the foreign-invested company and the status of all branches, representative offices, and business locations of the foreign-invested company in the National Enterprise Registration Information Portal to a status of temporary business suspension.
Foreign-invested companies can register to continue doing business before the notified deadline at the same time as registering to continue doing business before the notified deadline for branches, representative offices, and business locations of foreign-invested companies. The Business Registration Authority will update the legal status of the foreign-invested company simultaneously with the status of branches, representative offices, and business locations in the National Enterprise Registration Information Portal.
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Dossier components when carrying out procedures to suspend investment project operations
Dossier for notification of temporary business suspension of a foreign-invested company
- Notice of temporary suspension of business operations according to the form in Appendix II-19 attached to Circular 01/2021/TT-BKHDT;
- Resolutions, decisions and copies of meeting minutes of the Board of Members for multi-member limited liability companies, partnerships, and of the Board of Directors for joint stock companies; resolutions and decisions of the company owner for a single limited liability company on temporary business suspension;
- Decision to temporarily suspend the investment project of the investor;
- Copy of the latest Enterprise Registration C
Dossier for suspension of the investment project
- Notice of suspension of investment project operations according to the form in Appendix A.1.13 attached to Circular 03/2021/TT-BKHDT, amended by Circular 25/2023/TT-BKHDT;
- Copy of the Investment Registration Certificate of the foreign-invested c
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Obligations of foreign-invested companies when temporarily suspending operations
According to Article 206.3 of Law on Enterprises 2020, during the period of temporary business suspension, enterprises must pay all outstanding taxes, social insurance, health insurance, and unemployment insurance; continue to pay debts, complete the implementation of contracts signed with customers and employees, unless otherwise agreed upon by the enterprises and creditors, customers and employees.
For projects of foreign-invested companies that suspend operations due to force majeure, the foreign-invested companies will be exempted from land rent and reduced land use fees by the State during the suspension period to overcome consequences caused by force majeure[2].
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Regulations on administrative penalties related to the procedures for suspending investment projects
Foreign-invested companies that temporarily suspend investment project operations without fully implementing the procedures stated in Section 2 may be subject to administrative sanctions as follows:
For the act of not sending a notice to the investment registration authority within 05 working days from the date of decision to suspend operations of the investment project, the administrative fine level ranges from VND30,000,000 to VND50,000,000 and the company is required to notify the investment registration authority[3].
In case of suspending operations of the investment project for a total period of more than 12 months, the company will be fined from 70,000,000 to 100,000,000 VND and forced to continue implementing the investment project according to the schedule specified in Investment Registration Certificate or termination of investment project operations[4].
For the act of not notifying or not notifying on time to the business registration authority about the time and duration of business suspension or business resumption, the administrative fine is from VND10,000,000 to VND15,000,000 and the company is required to notify the business registration authority of the time and duration of business suspension or resumption[5].
The above is an overview of necessary procedures when suspending project operations of a foreign-invested company. If you encounter any difficulties related to the legal field, please contact us. Phuoc & Partners is a law firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Da Nang. Phuoc & Partners is also considered one of the law firms with a team of staff specialising in the leading legal field in Vietnam and whose practice areas are rated top in the legal market such as Labour and Employment, Taxation, Mergers and Acquisitions, and Litigation. We are confident that we are one of the Law Firms providing the best legal services to our customers.
[1] Article 66.1 Decree 01/2021/ND-CP.
[2] Article 47.1 Law on Investment 2020
[3] Article 15.1(d) and 15.2(d) Decree 122/2021/ND-CP
[4] Article 19.2(c) and 19.4(d) Decree 122/2021/ND-CP
[5] Article 50.1(c) and 50.2(c) Decree 122/2021/ND-CP
