Conditions for transferring investment projects and related legal issues

Project transfer is the process by which an investor transfers all or part of the rights, obligations, and assets of their project to another investor through a contract. However, this is not a simple transaction. Transferring an investment project always requires strict adherence to legal conditions to ensure its legality and protect the rights of all parties involved. Vietnamese HTC Law will clarify the important conditions and legal issues to consider when carrying out investment project transfers.

1. Why is it necessary to transfer investment projects?

The primary objective of transferring an investment project is to continue business operations and transfer ownership, exploitation, or operation rights of the project from one investor to another. This offers several practical benefits:

- Creating new opportunities and maintaining operations: When investors currently face financial difficulties or change strategies, transferring ownership helps the project continue to develop, avoiding abandonment and wasting social resources.

- Maximizing profits: New investors can bring better capabilities, experience, or expertise, helping to fully exploit the project's potential, improve efficiency, and increase profitability.

- Optimizing resources and restructuring strategies: Businesses may decide to divest non-core projects to focus on other strategic priorities, optimizing the allocation of additional resources.

- Access to new capital and increased liquidity: The transferee can provide new capital while helping the transferor recover capital for reinvestment in other projects.

- Risk reduction: Transferring to a more competent consultant can help mitigate risks for the current consultant, especially when the project encounters difficulties.

2. Conditions for transferring investment projects: Who is eligible to transfer, and who is eligible to receive?

For an investment project to be legally transferred, the project, the transferor, and the transferee must all meet specific conditions:

2.1. Conditions for the project and transfer rights

- The project is not terminated: The project or the transferred part of the project does not fall under the cases of termination of operation as stipulated in the 2020 Investment Law (such as real estate projects, inability to contact investors, land reclamation, etc.).

- The project has a clear and defined approval process: There is a reviewer with the authority to approve the database and a detailed 1/500 scale or overall process has been approved.

- Completion of compensation and land clearance: The entire or part of the transferred project has completed the compensation and land clearance work. For infrastructure projects, the corresponding infrastructure construction techniques must be completed for approval.

- No disputes or violations: The project is not subject to land use rights approval, seizure for enforcement of judgments, or other formal action decisions. In case of violations, the investor must comply with any penalty decisions.

- Land use right certificate: The transferring investor must have a land use right certificate for the entire or part of the project being transferred.

- Within the land use period: The project is still within the land use period as stipulated by regulations.

2.2. Conditions for receiving a franchise

- Real estate business (for real estate projects): If it is a real estate project, the entity receiving the transfer must be a business operating in the real estate sector.

- Financial capacity: Sufficient financial capacity must be demonstrated through the following: financial statements for the two most recent years, audited equity reports, commitments of financial support from the parent company or primary financial institution, or other assets demonstrating financial capacity.

- Commitment to continue project implementation: Commitment to continue developing investment, construction, and business operations in accordance with the approved project schedule and content.

3. Investment project transfer process

The procedure for transferring an investment project can be complex depending on the specific sector of the project (e.g., the project has already been approved for an investment account holder, the project is operational, the project has foreign elements, etc.). However, basically, the process will include the following steps:

- Step 1: Prepare the documents. This includes documents related to the project (investment account holder decision, investment registration certificate, contract, land documents, financial statements, etc.) and documents from the transferor and transferee. The number of documents may vary depending on the verification authority of the receiving entity (Ministry of Planning and Investment or provincial-level investment registration authority).

- Step 2: Submit the application to the competent authority:

+ For large projects involving changes in the investor's account, the necessary documents can be submitted to the Ministry of Planning and Investment.

+ For typical project information, preliminary documents are provided at the Investment Registration Authority (usually the Department of Planning and Investment) where the project is located.

- Step 3: Review and approval of adjustments: The competent authority will review the transfer conditions, assess the documents, and may seek architectural opinions from relevant agencies.

- Step 4: Decision-making and certification: If the application is valid and meets all requirements, the Investment Registration Authority will decide to accept the amendment of the consultant and/or amend the investment registration certificate, recording the information of the new consultant.

- Step 5: Complete related procedures (if any): Especially in the case of foreign investors receiving the transfer and establishing an economic organization to implement the project, additional procedures for establishing an economic organization in accordance with the provisions of enterprise law must be carried out.

The transfer of an investment project is a significant transaction, fraught with potential risks if regulations are not properly implemented. To ensure the protection of rights and a smooth transfer process, consultants should seek professional advice from reputable law firms.

With extensive experience in the investment field, HTC Vietnam Law Firm is ready to assist clients in all aspects of project transfer procedures. Contact us for advice and answers to all your questions!

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Best regards!

(Author: Le Nguyen Phuong; Translator: Nguyen Phuong Anh; Date: June 15, 2025)

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