Vietnam Factory Transfer in Industrial Parks: Roles of 5 Key Parties

TRANSFER OF FACTORY ASSETS IN INDUSTRIAL PARKS: ROLES AND RESPONSIBILITIES OF 5 KEY PARTIES

Enterprises with projects that have constructed factories in industrial parks (IPs) fully possess the right to transfer these assets attached to the land. In reality, this is a common activity recognized and protected by law. However, unlike typical real estate transactions, transfers within IPs require the participation and approval of multiple related parties, strictly adhering to the regulations of the 2024 Land Law, 2020 Investment Law, 2023 Law on Real Estate Business, and 2023 Housing Law.

In this article, An would like to share in detail the legal roles and responsibilities of the 5 key parties involved in the transaction of transferring assets attached to land in IPs.

1. CORRECTLY UNDERSTANDING ENTERPRISE RIGHTS IN IPs

First, it is necessary to clarify the nature of land use rights for enterprises in IPs:

• Subleased Land: Most enterprises in IPs are not allocated land directly by the State but rather sublease land use rights from the IP infrastructure development company.

• Right to Transfer: Whether the land is leased with annual payments or a one-off payment, enterprises are still issued a Certificate of land use rights and ownership of assets attached to land (Pink Book). Once a factory has been legally invested in and built, the enterprise has the right to sell and transfer its owned assets attached to that leased land.

Legal Basis:

• Clause 1, Article 12 of the 2023 Law on Real Estate Business: Allows the transfer of land use rights with technical infrastructure in real estate projects.

• Article 37 of the 2024 Land Law: Regulations on the rights and obligations of economic organizations using leased land, including the right to sell assets attached to the land.

2. ROLES AND RESPONSIBILITIES OF THE 5 KEY PARTICIPATING PARTIES

A factory transfer transaction in an IP is only successful with the participation and coordination of the following 5 parties:

A. THE SELLER (TRANSFEROR)

This is the current owner of the asset, responsible for ensuring the "clean" legal status of the asset before the transaction.

• Responsibilities & Conditions:

  • Asset Legality: Must have a Certificate (Pink Book) for both land use rights and construction ownership (completed and accepted).

  • Asset Status: Land and assets must be free from disputes and not distrained for judgment enforcement.

  • Usage Term: Land use rights must still be within the lease term.

  • Financial Obligations: Must have completed financial obligations with the IP infrastructure company (management fees, land rent, etc.).

Legal Basis: Article 37 of the 2024 Land Law; Clause 2, Article 14 of the 2023 Law on Real Estate Business.

B. THE BUYER (TRANSFEREE)

As the entity receiving the asset and project, the Buyer needs to demonstrate sufficient capacity to continue operations.

• Responsibilities & Conditions:

  • Financial Capacity: Must prove financial ability to maintain and develop the project after receiving the transfer.

  • Investment Objectives: The intended business line must be consistent with the IP's planning and approved by competent authorities.

  • Legal Compliance: Commitment to strictly implement regulations on environmental protection and other IP obligations.

Legal Basis: Article 46 of the 2020 Investment Law regulating conditions for transferring investment projects.

C. INDUSTRIAL PARKS INFRASTRUCTURE DEVELOPMENT COMPANY

This is the "landlord" unit, playing a crucial intermediary and control role. The transaction cannot be executed without this unit's consent.

• Role:

  • Providing Information: Guiding the Buyer on business lines permitted to attract investment into the IP.

  • Confirming Obligations: Confirming that the Seller has completed all financial obligations and has no outstanding debts.

  • Signing New Land Sublease Contract: After the transaction is complete, the infrastructure company will liquidate the contract with the Seller and sign a new Land Sublease Contract with the Buyer. This is a mandatory step for the Buyer to have full legal grounds for land use.

Legal Basis: Article 174 of the 2024 Land Law regulating rights and obligations of economic organizations investing in construction and business of IP infrastructure.

D. MANAGEMENT BOARD OF INDUSTRIAL PARKS & EXPORT PROCESSING ZONES (STATE AGENCY)

This is the direct local state management agency (names may vary by province/city: HCMC Export Processing and Industrial Zones Authority (HEPZA), Tay Ninh Economic Zone Authority, etc.).

• Role:

  • Appraising New Projects: Reviewing the Buyer's investment registration dossier to ensure project objectives align with general planning and the IP's overall Environmental Impact Assessment (EIA) report.

  • Checking Current Status: Establishing an inspection team to check the Seller's actual factory to ensure construction is licensed and without illegal extensions before permitting transfer.

  • Licensing: Issuing an approval document (or new/adjusted Investment Registration Certificate) as the highest legal basis for the project transfer.

Legal Basis: Article 39 of the 2020 Investment Law regulating the authority of Management Boards of Industrial Parks, Export Processing Zones, and Economic Zones.

E. NOTARY OFFICE

The unit ensuring the legality of the Transfer Contract.

• Role:

  • Legal Verification: Verifying the legality of the entire dossier (Pink Book, approval documents from the Management Board, Land Lease Contract, etc.).

  • Transaction Authentication: Notarizing the Contract for the transfer of assets attached to land, serving as the basis for parties to perform procedures for transferring the Pink Book title at natural resources and environment agencies.

Legal Basis: 2014 Law on Notarization; Clause 3, Article 167 of the 2013 Land Law (now 2024 Land Law).

CONCLUSION

A factory transfer transaction in an IP is a complex process requiring legal understanding and close coordination among 5 parties. Clearly identifying roles and responsibilities from the beginning will help enterprises save time, costs, and avoid unnecessary legal risks.

In the following articles, An will delve deeper into analyzing the detailed transfer process and the dossier required for each party. We look forward to your interest and feedback!