Key considerations when terminating an investment project

The termination of an investment project marks a significant turning point in business operations, driven by various subjective or objective factors. Regardless of the cause, this process always requires meticulous preparation and compliance with legal regulations to protect the rights of investors and minimize legal risks. In this article, PLF will outline the key legal considerations that investors should be aware of when terminating an investment project.

1. Cases of termination of investment project activities 

According to the Law on Investment 2020 (“Law on Investment”) and related guiding documents, there are two main groups of grounds for terminating the activities of an investment project:

a. Termination by the investor’s decision 

The investor has the right to decide to terminate the project in the following cases:

1. 1. The investor decides to terminate the activities of the investment project;
   2. According to the termination conditions specified in the contract or the company’s charter;
   3. The investment project has reached the end of its operational term.

b. Termination by decision of the Investment Registration Authority 

The Investment Registration Authority may decide to terminate or partially terminate the operation of an investment project in the following cases:

1. 1. The investment project has been suspended in accordance with the provisions of Clause 2 and Clause 3 of Article 47 of the Law on Investment, and the investor is unable to remedy the conditions for suspension;
   2. The investor is not allowed to continue using the investment location and has not completed the procedure for adjusting the investment location within 06 months from the date of being prohibited from continuing to use the investment location; or the investment project falls under the case of land recovery due to failure to put the land into use or delay in putting the land into use as prescribed by land laws;
   3. The investment project has ceased operations, and 12 months have passed since the date of cessation, and the Investment registration authority cannot contact the investors or the legal representative of the investors;
   4. The investor has not deposited or does not have a guarantee for the deposit obligation as prescribed by law for investment projects that are required to secure the implementation of the investment project;
   5. The investor conducts investment activities based on fictitious civil transactions as prescribed by civil laws;
   6. According to the judgment or decision of the Court, or the arbitration award.

2. Key considerations when terminating an investment project 

Investors need to pay attention to the following important issues to ensure that the process of terminating the investment project proceeds smoothly and minimizes risks:

a. Complete the investment report as required 

Before terminating investment project activities, investors must submit all required investment reports according to the provisions of law. These reports include periodic reports of economic organizations implementing investment projects quarterly and annually, and reports on investment supervision and evaluation every 6 months and 1 year.

Investors should pay attention to making reports on time and fully according to the requirements in the Law on Investment and related guiding documents. This helps the Investment Registration Authority clearly understand the project status before approving its termination. If this obligation is not fulfilled, investors may face legal consequences such as being subject to administrative fines or being denied approval to terminate operations.

b. Implement the correct procedure for sending the decision or notice of termination of operation  

Investors need to notify the termination of the investment project within 15 days, according to the following content:

1. 1. In the case of self-deciding to terminate the operation of the investment project, the investor must send the decision to terminate the operation of the investment project mentioned above to the Investment Registration Authority within 15 days from the date of the decision, along with the Investment Registration Certificate (if any); or
   2. In the case of terminating the operation of the investment project according to the conditions specified in the contract, the company’s charter, or the expiration of the investment project’s operation period, the investor needs to notify and return the Investment Registration Certificate (if any) to the Investment registration authority within 15 days from the date of termination of the investment project’s operation, accompanied by a copy of the document recording the termination of the investment project’s operation. If not implemented, the Investment Registration Authority will terminate the operation of the investment project according to the provisions of law.

Remarks: For investment projects subject to investment policy approval, the Investment Registration Authority will terminate the operation of the investment project after receiving the opinion of the investment policy approval authority.

c. Liquidation of the investment project 

After the investment project has terminated its operation, the investor needs to carry out the liquidation of the investment project, including:

1. 1. The investor self-liquidates the investment project according to the provisions of law on asset liquidation (not applicable to real estate assets);
   2. For investment projects where the State allocates land, leases land, or allows the change of land use purpose, the handling of land use rights and assets attached to the land shall be carried out according to the provisions of land laws and related laws. In this case, the investor should work with the competent land management authority to ensure that the assets are handled in accordance with the law;
   3. During the liquidation process of the investment project, if the investor is an economic organization that is dissolved or in a state of bankruptcy, the liquidation of the investment project shall be carried out according to the provisions of law on the dissolution and bankruptcy of economic organizations.

d. Review and finalize commitments and obligations under the contract  

Investors need to review all commitments and obligations in the contract before terminating the project to ensure that they do not violate the signed agreements. The review should include not only the terms in the investment and commercial contracts but also related subcontracts such as service supply contracts or contracts with third parties. At the same time, investors must notify and resolve all contracts, agreements, and obligations with third parties and state agencies to avoid disputes or liabilities arising after the project termination. Additionally, relevant regulations in the company’s charter must be strictly adhered to avoid being held accountable after the project concludes.

e. Consequences when terminating part of the investment project activities 

If the investor or the Investment Registration Authority decides to terminate part of the investment project activities in accordance with the provisions of the Law on Investment, the investor is allowed to continue implementing the part of the project that is not terminated, while also carrying out the procedures to adjust the investment project as appropriate.

f. Consequences when terminating the investment project while simultaneously terminating the operations of the economic organization 

In the case where the termination of the investment project coincides with the closure of the economic organization. The cessation of the investment project should align with the procedures outlined in this article. Additionally, the investor must carry out the procedures to terminate the operations of the economic organization in accordance with the law corresponding to each type of economic organization.

It is crucial to note that the termination of the project and the economic organization will not exempt the investor from any outstanding financial obligations or tax debts. Investors should review and complete their financial obligations with tax authorities and other regulatory agencies to avoid being subject to back taxes or penalties. Projects related to contractor tax or land tax need to be carefully monitored to avoid future conflicts.

Moreover, investors should also pay attention to the impact on employees. Coordinating with the relevant labor management authorities to implement appropriate compensation schemes or leave policies as prescribed is not only a mandatory obligation but also a measure to protect the legitimate rights of employees, preventing potential disputes in the future.

Terminating an investment project is a complex process that requires investors to strictly comply with legal regulations and fulfill related obligations. Through this article, PLF hopes to provide investors with useful information to proactively protect their rights, minimize potential legal risks, and prepare thoroughly for the project termination process in all situations. This preparation not only ensures compliance with the law but also contributes to protecting the company’s reputation in the market.

Article time: 08/09/2025