To buy a real estate project in Vietnam, you may have 02 options: (1) buying the shares of the project company; (2) transfering the project (the asset) from the project company to your company - usually a new set-up company.
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Option (1): Besides checking the project legal status and details, you may need to carry out legal DD and financial DD of the target company. It costs money and time. Sometime, the target company has a long history and the DD works will be more complicated.
Option (2): You may avoid doing DD works for the target company. You just want to transfer the project itself to your company.
In this article, we only mention about the procedures for option 2.
1. Conditions for transfer of the real estate project
According to Article 49 of the Law on real estate trading, the conditions of transfer of all or a portion of the real estate project shall include following conditions:
a. Conditions for the real estate project
The project is approved by competent agencies; there is a specific planning 1/500 or general ground planning which is approved;
The compensation or site clearance of the transferred project or a portion of the transferred project has been finished;
The land use rights in the project is not disputed or distrained to guarantee judgment or to comply with an administrative decision by competent agencies;
There is no decision on project or land revocation conducted by a competent agency; in case there is any violation during the progress of the project, the investor must abide by the decision on penalty.
b. Conditions for transferor
The transferor has a Land Use Right Certificate regarding all or a portion of the transferred project.
c. Condition for transferee
The transferee must be a real estate enterprise, has financial competence and commit to keep conducting the business as prescribed in regulations of law and ensure that the project is conducted under proper progress and plan. 2. The procedures for transfer of the real estate project
a. Preparation of Application dossier
According to Article 12.2 of the decree No.76/2015/ND-CP of the Government on guidelines for law on real estate trading (“Decree No.76”), the application dossier include following documents:
- An application form for transfer of the whole or a part of the project;
- Documents on the whole project or the part to be transferred include:
An investment permit or an investment acceptance issued by the competent agency (certified true copy);
A decision on approval for the project, a 1/500 detailed planning or a master plan (certified true copy);
A land use right certificate of the whole project or the part to be transferred (certified true copy).
- A report on the process of project execution until the transfer time by the transferor (using the form No. 09a and 09b prescribed in Appendix issued with Decree No.76).
- Documents of the investor being transferee include:
An application form for receiving transfer the project (using form No. 10a and 10b prescribed in Appendix issued with Decree No.76);
A certificate of business registration containing real estate business line or a certificate of enterprise registration whose charter capital is compliant with law (certified true copy), unless the foreign investor has not established an economic organization as prescribed in law on investment;
Proven document on owner’s equity as prescribed in law on investment and land. With respect to an operating enterprise, if there is no proven document on owner’s equity as prescribed in law on investment and land, it is required a certification issued by an independent audit organization or a financial statement whose owner’s equity is audited at the latest year (the year in which the contract is transferred or the previous year of such year); with respect to a new enterprise, if its capital is in the form of money in VND or foreign currency, the commercial bank where such enterprise opened its account shall certify the amount of deposit balance of the enterprise, if its capital is in the form of assets, a certificate of assessment of the assets’ value of the enterprise issued by a competent assessing organization is required.
b. Procedure for submitting the Application dossier
The transferor submits an application dossier to authority agencies. Under the Article 50 of the Law on real estate trading and Article 12.1 and Article 13 of Decree No.76, the authority agencies permit the transfer of the real estate project specified as follows:
- The People’s Committees of provinces shall consider permitting the transfer of all or a portion of real estate project which is approved by themself. In which, in case of the project of new urban area and housing development, the authority agency is Service of Construction; in case of other type of project of real estate, the authority agencies is a specialized service prescribed by the People’s Committee of the province.
- The Prime Minister shall consider permitting the transfer of all or a portion of real estate project regarding projects approved by the Prime Minister.
The time for processing the application dossier is: Within 30 days from receiving the satisfactory application dossier, in case the project is permitted by the People’s Committees of provinces or within 45 days receiving the satisfactory application dossier, in case the project is permitted by the Prime Minister. In above mentions time, the authority agencies shall consult with the other related authority agencies to decide the transfer permit. If the application dossier is rejected, the authority agencies shall provide the transferor with explanation. Within 30 days from the day on which the decision on permission for project transfer is made by the authority agency, the parties must
(i) finish the signing of transfer agreement (the transferee must keep executing the project or the part being transferred); and
(ii) transfer project (including all documents of the whole project or documents of the part being transferred, transfer note and list of documents to the transferee).
Note: Before carrying out the transfer, the transferor must notify all their clients (if any) and announce by means of mass media before 15 days (at least 03 consecutive issues of a newspaper published in the locality or a local television channel or a website of the central agency (if any) in terms of the transfer, rights and interests of clients and relevant entities). If any client or relevant entity wonders their rights and interests involved in the project or the part being transferred, the transferor is required to provide feedback before signing the transfer agreement.
Please consult M&A experts for professional advice: firstname.lastname@example.org
Ho Thanh Bon
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