CONDITIONS AND PROCEDURES FOR TRANSFERRING REAL ESTATE PROJECTS FROM JANUARY 1, 2025, ACCORDING TO THE NEW REAL ESTATE BUSINESS LAW 2023

Conditions and Procedures for Transferring Investment Projects According to the Investment Law 2020

Current market research shows the transfer of projects between different investors. So, what conditions must an investor meet to transfer a project, and what are the procedures for transferring investment projects and real estate projects (BĐS) according to the new regulations of the Investment Law 2020 and the Real Estate Business Law 2023?

Conditions for Transferring Investment Projects

Conditions for the Project Transferor

- The investment project or part of the investment project to be transferred must not be terminated under the provisions of Clauses 1 and 2 of Article 48 of the Investment Law 2020.

- The project must have been approved by the competent state authority and have a detailed plan with a 1/500 scale or an approved general site plan.

- The project or part of the project to be transferred must have completed the compensation and site clearance process.

- In the case of transferring the entire investment project for infrastructure construction, the technical infrastructure works must be completed according to the approved project progress.

- The project must not be involved in any land use rights disputes and must not be seized to ensure the execution of court rulings or administrative decisions from competent state agencies.

- There should be no decisions to revoke the project or land from competent state agencies.

- If there are violations during the project implementation, the investor must comply with the penalty decisions.

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

- The project must be within the land use duration as prescribed.

Conditions for the Project Transferee

- The transferee must be an enterprise operating in the real estate business sector.

- The transferee must have sufficient financial capacity, demonstrated by financial statements from the past two years or audit reports of the investor's equity, financial support commitments from the parent company, financial institutions, guarantees of the investor's financial capacity, or other documents proving the investor's financial capability.

- The transferee must also commit to continuing the investment, construction, and business in accordance with legal regulations, ensuring the project's progress and content.

Procedures for Transferring Investment Projects

There are six cases that may occur when transferring investment projects, and the procedures for each Case will vary accordingly. Here are the specific steps for transferring investment projects as per the provisions of the Investment Law 2020:

Case 1: For Investment Projects Approved with Both Investment Policy and Investor Approval, Where the Investor Transfers the Entire Project Before It Becomes Operational or When There Are Changes in Investor Conditions

Case 2: For Investment Projects Approved with Investment Policy, Where the Project Transfer Alters the Content of the Approved Investment Policy in Any of the Cases Specified in Points a, b, c, d, đ, and e of Clause 3, Article 41 of the Investment Law 2020

Procedures for cases 1 and 2:

Step 1: Submit 8 sets of documents (as outlined in section 2.1) to the Ministry of Planning and Investment or 4 sets of documents to the Investment Registration Authority corresponding to the authority approving the investment policy for the project.

Step 2: The competent authority reviews the conditions for transferring the investment project according to Clause 1, Article 46 of the Investment Law 2020 to decide on adjusting the investment project as per the corresponding provisions in Articles 44, 45, and 46 of Decree 31/2021/ND-CP.

Case 3: For Investment Projects Approved with Investment Policy, Where the Project Transfer Does Not Alter the Content of the Approved Investment Policy in Any of the Cases Specified in Points a, b, c, d, đ, and e of Clause 3, Article 41 of the Investment Law 2020, the Investor Conducts Procedures to Adjust the Investor Approval Decision

Procedures for Case 3:

Step 1: Submit 4 sets of documents to the Investment Registration Authority, replacing the proposal to adjust the investment project with a proposal to approve the investor adjustment.

Step 2: Within 3 working days from receiving valid documents, the Investment Registration Authority sends the documents to relevant competent state agencies for opinions on meeting the requirements specified in Points b, c, and d of Clause 4, Article 33 of the Investment Law 2020.

Step 3: Within 15 days from receiving valid documents, the consulted agencies provide their opinions on matters within their state management scope to the Investment Registration Authority.

Step 4: Within 25 days from receiving valid documents, the Investment Registration Authority prepares an appraisal report containing content as per Points b, c, and d of Clause 4, Article 33 of the Investment Law 2020, and submits it to the provincial People's Committee.

Step 5: Within 7 working days from receiving the documents and the appraisal report, the provincial People's Committee decides on approving the investor adjustment.

Step 6: The investor adjustment approval decision records the transferring and receiving investors, and the transferred part of the project (if any), and is sent to the Investment Registration Authority, the transferring investor, and the receiving investor.

Case 4: For Investment Projects Approved with Investment Policy and Already in Operation, the Investor Does Not Need to Conduct Procedures to Approve Investment Policy Adjustment When Transferring the Project

Case 5: For Investment Projects Granted an Investment Registration Certificate and Not Subject to Investment Policy Approval or Approved with Investment Policy but Not Falling Under Clause 3, Article 41 of the Investment Law 2020

Procedures for Case 5:

Step 1: The transferring investor submits 1 set of documents to the Investment Registration Authority.

Step 2: The Investment Registration Authority reviews the conditions for transferring the investment project as per Clause 1, Article 46 of the Investment Law 2020 to adjust the investment project according to Article 47 of Decree 31/2021/ND-CP.

Step 3: The adjusted investment registration certificate is sent to the transferring investor and the receiving investor.

Case 6: Procedures for Adjusting the Investment Project When the Transferring Investor Transfers the Project to a Foreign Investor Who Establishes an Economic Organization to Implement the Investment Project

Procedures for Case 6:

Step 1: The transferring investor conducts procedures to adjust the investment project according to the relevant cases mentioned above.

Step 2: After completing the procedures, the foreign investor receiving the project conducts procedures to establish an economic organization in accordance with the relevant enterprise law for each type of economic organization.

Documentation for Transferring Investment Projects

The documentation for transferring an investment project according to investment laws includes:

• A document requesting the adjustment of the investment project.
• A report on the implementation status of the investment project up to the time of transfer.
• The contract or principle contract for transferring part or all of the investment project.
• Copies of documents proving the legal status of both the transferring and receiving investors.
• A copy of the Investment Registration Certificate.
• The decision approving the investment policy.
• The decision approving the investor (if any).
• A copy of the BCC contract (for projects implemented in the form of a BCC contract).
• A copy of one of the following documents of the investor receiving the project:
  • Financial statements for the last two years or an audit report of the investor's equity.
  • A financial support commitment from the parent company.
  • A financial support commitment from a financial institution.
  • A guarantee of the investor's financial capability.
  • Documents explaining the investor's financial capability.

Conditions and Procedures for Transferring Real Estate Projects from January 1, 2025, According to the New Real Estate Business Law 2023

New Regulations on Conditions for Transferring Real Estate Projects

Compared to the current regulations, the Real Estate Business Law 2023, effective from January 1, 2025 (Article 40), adds a condition that the transferring investor must fulfill all financial obligations regarding land for the project. This regulation tightens the transfer conditions for the transferring party, preventing project transfers aimed at profit-making and aligning with the principle that sellers can only transfer what they legally own. CBRE notes that this provision screens investors, allowing only those with strong financial capacity to engage in M&A activities. However, it may also pose a burden on investors given the frequent delays in project implementation in Vietnam.

Chapter V of the Real Estate Business Law 2023 also introduces several significant new points related to the transfer of real estate projects:

*/ Firstly, the Real Estate Business Law 2023 specifies that after completing the transfer, the transferee inherits the rights and obligations of the transferring investor and becomes the investor for the project or project part received (Clause 3, Article 39).

*/ Regarding the conditions for transferring all or part of a project, in addition to conditions inherited from Article 49 of the Real Estate Business Law 2014, Article 40 of the Real Estate Business Law 2023 adds important conditions such as:

• The land use rights for the project or project part being transferred must not be subject to any legal restrictions on transactions; it must not be under suspension or temporary suspension of transactions according to legal provisions (Point d, Clause 1).
• If the project is mortgaged to ensure the fulfillment of obligations under legal provisions, it must be released from the mortgage (Point e, Clause 1).
• The project must still be within the implementation period (Point g, Clause 1).
• For transferring part of a real estate project, it must be ensured that the construction items or the intended use and business purposes of the construction items in the transferred part can be independent of other parts of the real estate project (Point h, Clause 1).
• Notably, according to Clause 3, Article 40 of the Real Estate Business Law 2023, the condition for transferring a project does not require the investor to have a land use rights certificate under land law for the entire or part of the transferred project but only requires a decision on land allocation, land lease, or permission to change land use purpose to implement the project from a competent state agency and the fulfillment of financial obligations regarding land for the project or project part being transferred.

*/ The Real Estate Business Law 2023 also includes specific regulations for determining the authority to approve the transfer of all or part of a real estate project. Article 41 specifies:

• For real estate projects approved for an investor or granted an Investment Registration Certificate under the Investment Law, the authority and procedures for transferring all or part of the real estate project follow the provisions of the Investment Law.
• For real estate projects not covered by Clause 1 of this Article, the authority to approve the transfer of all or part of a real estate project is as follows:
  • The Prime Minister decides on approving the transfer of all or part of a real estate project for projects where the Prime Minister decides on the investment policy, approves the investment policy, or approves the investment. If the Prime Minister authorizes the provincial People's Committee to decide on transferring part of the project, the provincial People's Committee decides on approving the transfer of part of the project according to Clause 2, Article 42 of this Law.
  • The provincial People's Committee decides on approving the transfer of all or part of a real estate project for projects where the provincial People's Committee decides on the investment policy, approves the investment policy, or approves the investment.

Procedures for Transferring Real Estate Projects from January 1, 2025

According to Article 42 of the Real Estate Business Law 2023, the procedures for transferring all or part of a real estate project are as follows:

• Procedures for transferring all or part of a real estate project under the authority of the Prime Minister (Clause 2, Article 41 of the Real Estate Business Law 2023):
  • The project investor submits the transfer application to the provincial People's Committee where the project is located or the provincial-level state management agency in charge of real estate business authorized by the provincial People's Committee.
  • Within 45 days from the date of receiving a complete application, the provincial People's Committee consults the Ministry of Construction and relevant ministries, sectors, and agencies, organizes an appraisal, and submits it to the Prime Minister for consideration and approval. If the project does not meet transfer conditions, the receiving agency must notify the project investor in writing, stating the reasons.
  • After receiving the Prime Minister's approval, the transferring and receiving parties sign the transfer contract and hand over the project.
• Procedures for transferring all or part of a real estate project under the authority of the provincial People's Committee (Clause 2, Article 41 of the Real Estate Business Law 2023):
  • The project investor submits the transfer application to the provincial People's Committee where the project is located or the provincial-level state management agency in charge of real estate business authorized by the provincial People's Committee.
  • Within 30 days from the date of receiving a complete application, the provincial People's Committee consults relevant agencies, organizes an appraisal, and issues a decision on approving the transfer. If the project or part of the real estate project does not meet the transfer conditions, the receiving agency must notify the project investor in writing, stating the reasons.
  • After receiving the provincial People's Committee's approval, the transferring and receiving parties sign the transfer contract and hand over the project.
• For cases where the transferee of all or part of the project (Clause 2, Article 41 of the Real Estate Business Law 2023) is an economic organization with foreign investment (Clause 4, Article 10 of the Real Estate Business Law 2023):
  • After receiving approval from the competent state agency and signing the transfer contract, the foreign-invested economic organization must conduct land procedures according to land law.

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