Circular No. 03/BKH-QLDA guiding procedures for implementing foreign investment projects in Vietnam

CIRCULAR

Guidelines for Procedures

to Implement Foreign Investment Projects in Vietnam
_____________

MINISTRY OF PLANNING AND INVESTMENT

Pursuant to the Law on Foreign Investment in Vietnam dated November 12, 1996;

Pursuant to Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam.

Pursuant to Decree No. 75/CP dated November 1, 1995 of the Government stipulating the functions, tasks, and organizational structure of the Ministry of Planning and Investment.

The Ministry of Planning and Investment issues this Circular to guide procedures for implementing foreign investment projects that have been granted investment permits as follows:

PART I
PROCEDURES FOR ESTABLISHING A BUSINESS AND IMPLEMENTING PROJECTS
VÀ THỰC HIỆN DỰ ÁN

Article 1.

a) For Joint Ventures

Within three months from the date of issuance of the Investment License, the joint venture parties must convene the first meeting to undertake the following main tasks:

1.1 Establish the Board of Directors of the joint venture enterprise in accordance with Articles 11 and 12 of the Law on Foreign Investment in Vietnam.

1.2 Approve the list of Board of Directors members; appoint the Chairman and Deputy Chairmen of the Board of Directors; appoint the General Director, Deputy General Directors, and Chief Accountant.

The joint venture parties may appoint Deputy Chairmen of the Board of Directors, who act on behalf of the Chairman within the scope of authority delegated by the Chairman when the Chairman is absent.

1.3 Approve the operational regulations of the Board of Directors; define the working relationship between the Board of Directors and the General Director, Deputy General Directors; determine the powers and responsibilities of the General Director; delineate the functions and tasks of the General Director and the First Deputy General Director.

1.4 Specifically determine the statutory capital contribution schedule of the joint venture parties; establish monitoring mechanisms and acceptance measures for capital contributions; develop programs, plans, and schedules for establishing the enterprise as a basis for the General Director to prepare import equipment, machinery, materials plans, recruitment and training labor plans, basic construction plans, signing economic supply material, service contracts...

2. The minutes of the first meeting of the Board of Directors shall be sent to the Provincial Department of Planning and Investment or the Central City Department of Planning and Investment where the enterprise's headquarters is located (hereinafter referred to as the Department of Planning and Investment).

3. The list of the Board of Directors, General Director, and Deputy General Directors of the joint venture enterprise shall be registered with the Department of Planning and Investment. The Department of Planning and Investment shall confirm the list of the Board of Directors, General Director, and Deputy General Directors of the joint venture enterprise, and send copies to the Ministry of Planning and Investment and the licensing authority.

b) For Wholly Foreign-Owned Enterprises and Business Cooperation Contract Projects

For wholly foreign-owned enterprises, the establishment of the management structure of the enterprise is decided by the foreign investor within the time limit specified in Clause 1 of this Article.

For business cooperation contract projects, the joint venture parties may establish a Coordination Board if deemed necessary.

The list of management personnel of wholly foreign-owned enterprises and representatives of the joint venture parties shall be registered with the Department of Planning and Investment. The Department of Planning and Investment shall confirm the list of personnel and send copies to the Ministry of Planning and Investment and the licensing authority.

c) For Projects Invested in Industrial Zones and Export Processing Zones

For projects invested in industrial zones and export processing zones, the list of management personnel of the enterprise shall be registered according to the procedures stipulated in Clauses 3 of Points a and b of this Article and sent to the Management Board of the industrial zone or export processing zone where the project is implemented.

In case the enterprise fails to complete the above procedures within the prescribed time limit, the investor must report to the licensing authority the reasons for delay and request an extension of implementation.

Article 2.

After being appointed, the General Director of the joint venture enterprise, wholly foreign-owned enterprise, and joint venture parties shall perform administrative procedures such as:

1. Announcing the establishment of the enterprise in accordance with Article 32 of Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam (hereinafter referred to as Decree No. 12/CP).

2. Registering the headquarters of the enterprise;

3. Engraving and registering the seal at the provincial or central city Public Security Bureau where the enterprise's headquarters is located;

4. Opening a bank account, registering the accounting system applied at the Ministry of Finance;

5. Registering the labor recruitment plan with the local labor management agency.

Article 3.

Foreign-invested enterprises shall perform the following procedures:

1. Submitting the application for land use permit in accordance with Chapter IV of Decree No. 12/CP and the regulations of the Land Administration General Department.

For enterprises in industrial zones and export processing zones, after obtaining the Investment License, they shall implement the lease contract for land and use public utilities in the industrial zone and export processing zone with the enterprise constructing and operating infrastructure in the industrial zone and export processing zone.

2. Submitting the design approval application in accordance with Articles 84 and 85 of Decree No. 12/CP; implementing bidding regulations for construction and procurement of equipment in accordance with the bidding regulations. Upon completion of construction, report to the competent authority for design review about the completion of construction and apply for use in accordance with Article 88 of Decree No. 12/CP; implement settlement and final accounts for construction projects in accordance with Articles 89 and 90 of Decree No. 12/CP.

3. Registering export and import activities, export and import plans, and product consumption with the Ministry of Trade in accordance with Article 47 of Decree No. 12/CP.

4. Performing procedures: registering entry and exit for foreign employees; registering professional practice; registering the use of communication means; registering product quality and trademarks, etc.

PART II
AMENDMENTS AND SUPPLEMENTS TO THE INVESTMENT LICENSE

Article 4.

The contents of amendments and supplements to the Investment License include:

Changing partners, transferring capital;

Changing investment forms;

Amending or supplementing business objectives;

Establishing branches.

Capital adjustments (including increasing or decreasing investment capital, statutory capital; changing the capital structure, statutory capital contribution methods...).

Other amendments and supplements such as: duration of operation, tax rates, land rental fees, product consumption, status of machinery and equipment (new, used), etc.

Article 5.

1- For all cases of amending and supplementing the Investment License, the investor shall submit the application dossier to the authority issuing the Investment License.

In cases of refusal, the State Bank will issue a document refusing approval to use foreign currency within the territory and clearly state the reasons.

The request for amendment and supplement to the Investment License shall be signed by the General Director or the First Deputy General Director.

Decision of the Board of Directors of joint venture enterprises, agreement of parties involved in business cooperation contracts, proposal of the owner of wholly foreign-owned enterprises.

Report on the implementation of the Investment License from the date of issuance to the time of requesting amendment and supplement.

2- In addition to the documents specified in Section 1 above, depending on the content of the requested amendment and supplement to the Investment License, the investor must submit the following explanatory documents:

Amendment of objectives: reasons for amending project objectives, solutions to implement new objectives such as market, capital, technology...

Increase in capital: Reasons for increasing capital, financial conditions ensuring the increase in capital and the list of machinery and equipment needed due to increased capital. In case of increasing capital through reinvestment profits, there must be a certificate from the tax authority regarding the transfer of capital and change of partner: necessity to transfer capital; certification of the new partner's legal status and financial capacity; notarized transfer agreement specifying the conditions, methods, and price of transfer.

Establishment of branch: Necessity and business objectives of the Branch: approval opinion of the Provincial People's Committee on location and land rental fee (if applicable) for the intended location of the branch as a production site.

Other cases: Reasons for requesting amendment and supplement to the Investment License.

3- All documents stipulated in Sections 1 and 2 of this Article must be original or certified copies.

4- Number of dossiers:

For the first type of amendment and supplement to the Investment License as prescribed in Section 1 of Article 6, three sets of dossiers must be submitted, including at least one original set.

For the second type of amendment and supplement to the Investment License as prescribed in Section 1 of Article 6, six sets of dossiers must be submitted, including at least one original set.

In special cases, the authority issuing the Investment License may require the investor to submit additional dossiers beyond those specified above.

The dossiers must be printed, bound, and preserved long-term according to the Record Keeping Regulations.

Article 6.

1- Amendments and supplements to the Investment License are divided into two types:

Type 1: No change in the project's objectives and scale;

Type 2: Changes in project objectives and scale.

2- Authority to decide on amendments and supplements to the Investment License is as follows:

2.1. For amendments and supplements to the Investment License of Type 1 as prescribed in Section 1: The authority issuing the Investment License shall make amendments and supplements within its jurisdiction.

2.2. For amendments and supplements to the Investment License of Type 2 as prescribed in Section 1:

For projects in Group A (as defined in Article 93 of Decree No. 12/CP) and other Group B projects that become Group A projects upon amendment: The Ministry of Planning and Investment decides on the amendment and supplement of the license.

For other projects: The authority issuing the Investment License shall seek opinions from relevant Ministries and sectors before deciding on the amendment and supplement of the license.

Article 7.

Time limit for processing amendment and supplement dossiers:

1- For amendments and supplements to the Investment License of Type 1 as prescribed in Section 1 of Article 6: Within 15 days from the date of receipt of the dossier, the issuing authority shall notify the decision to the investor.

2- For amendments and supplements to the Investment License of Type 2 as prescribed in Section 1 of Article 6: Within 30 days from the date of receiving valid dossiers; the issuing authority shall notify the decision to the investor.

During the entire period mentioned above, the time taken for the investor to amend the amendment and supplement application dossier is not counted.

PART III
REPORTING, STATISTICAL RECORDING, AND INSPECTION REGIME
OF FOREIGN-INVESTED ENTERPRISES

Article 8

Foreign-invested enterprises and foreign parties participating in business cooperation contracts must submit annual financial reports to the Ministry of Finance, the Ministry of Planning and Investment, the Provincial or Central City Statistics Bureau, submit statistical reports to the Provincial or Central City Statistics Bureau, the Ministry of Planning and Investment, and the issuing authority; comply with the reporting and statistical recording regime as prescribed by the General Statistics Office and the Ministry of Planning and Investment.

For enterprises operating in industrial zones or export processing zones, in addition to submitting statistical reports to the aforementioned authorities, they must also submit reports to the Industrial Zone Management Board or Export Processing Zone Management Board.

Article 9

State management agencies shall conduct inspections of enterprises and joint venture parties according to their functions and powers as prescribed by law.

Inspections of foreign-invested enterprises shall be notified to the enterprise at least seven days prior to the inspection by the inspecting agencies.

Foreign-invested enterprises are responsible for providing complete information and data as required by the inspection team.

PART IV
TRANSFER WITHOUT COMPENSATION AND LIQUIDATION
V. PRINCIPLES FOR FINANCIAL SETTLEMENT DURING

Article 10.

The transfer without compensation of assets by the foreign party after the termination of the contract shall be carried out in accordance with the Contract and Investment License. Assets transferred at the end of the project's operation must be in normal working condition and belong to the State.

NH PHÓAt least six months before the expiration of the operation period, the Vietnamese party in a joint venture enterprise and the Investor (for wholly foreign-owned enterprises) must report to the Ministry of Finance and notify the issuing authority about the foreign party's transfer of assets without compensation.

Article 11

The liquidation committee of a joint venture enterprise established in accordance with Article 33 of Decree 12/CP shall be the executive body assisting the Board of Directors in the liquidation process, subject to the Board's directives for the execution of such liquidation.

The establishment and operation of the liquidation committee shall comply with the following provisions:

1. The Liquidation Committee shall be the sole representative of the enterprise in the liquidation process, conducting liquidation activities in accordance with the Decision establishing the Liquidation Committee and shall be responsible under the law for such activities.

2. Within fifteen days from the date of the decision to establish it, the Liquidation Committee shall convene its first meeting to approve the plan, method, and budget for its operations, submit these to the Board of Directors for approval, and announce the liquidation of the enterprise through mass media.

3. During the liquidation period, the Board of Directors, General Director, Deputy General Directors, and Chief Accountant have the duty to provide information, data, and funds necessary for the liquidation process, and sign relevant documents related to the liquidation.

4. Upon expiration of the liquidation period stipulated in Article 33 of Decree 12/CP, if the liquidation has not been completed, the Liquidation Committee shall cease operations; the joint venture parties shall handle any remaining matters themselves; in case of disputes, they shall be resolved according to the provisions of Article 102 of Decree 12/CP.

5. After completing the liquidation, the Board of Directors shall report the results of the liquidation to the investment permit issuing authority and the Ministry of Planning and Investment. If necessary, the Ministry of Planning and Investment may request specialized agencies to re-examine the liquidation results before making a final decision on the liquidation of the enterprise, revoking the investment permit, and notifying the relevant authorities thereof. The cost of examination shall be borne by the enterprise.

Foreign investors' revenues from the liquidation of the enterprise's assets can only be transferred abroad after the completion of the liquidation and upon approval by the investment permit issuing authority.

Article 12

Upon termination of operations at the time or before the time specified in the investment permit, the wholly foreign-owned enterprise and the joint venture parties must carry out asset liquidation and fulfill their obligations as prescribed in Article 33 of Decree 12/CP and this Circular.

Article 13

After termination of operations, the investor shall submit:

The enterprise's seal to the stamp-issuing authority;

The investment permit and business files to the local Department of Planning and Investment.

PART V
IMPLEMENTING PROVISIONS

Article 14

This Circular replaces the provisions guiding the implementation of investment projects set forth in Circular No. 215UB/LXT dated February 8, 1995, issued by the State Committee for Cooperation and Investment - now the Ministry of Planning and Investment, and shall take effect from the date of signature.