After a long period being affected by the Covid-19 epidemic, the investments in Vietnam have been backed to normal thanked to recent changes in opening the travel policies, increased business demands, and the support from the Government of Vietnam.

In addition to doing the indirect investment in Vietnam, the Investor may choose the direct investment in the form of establishing an enterprise. In such case, the Investor is required for having a lawful use right of a specific location to be its enterprise’s head office. This is an important requirement for completing the licensing procedure by the Investor. In order to identify if such location could be accepted by the authority while the potential dispute could be mitigated, the Investor must pay attention to the below criteria:

1. Legal status of the leased premises

In other articles, we have explained why doing research on the prospective location for investment and operation is considered as a crucial step to mitigate potential risks for the Investor. As a result, we highly recommend the Investor to assess the legal documents of such areas that might be the Certificate of land use rights or the Certificate of ownership of houses and other land-attached assets, Certificate of ownership of construction works, and the like, as the case may be.

In some cases, the Investor would need to check the records showing the process of creating the property on the land, such as construction permits and as-built documents, etc. to ensure that the construction process of such location is lawful.

This is also critical if there is any dispute related to the location, whether the existing or potential one, so that the Investor should check carefully to ensure the lawful use right of the lease location, avoiding the interference of any third parties.

2. Rights of the lessor on leasing the location

This is for identifying whether the lessor has full legal capacity and lawful rights to lease or sublease the location and can enter into a lease contract with the Investor. In other words, it is necessary to determine whether the lessor is the owner, the lawful user, or the person being entitled to enter into a lease or sublease contract of such location. If the leased location is legally owned and used by the lessor, the Investor should consider if the information mentioned in these documents is accurate, whether the property is jointly or privately owned or by any other co-owners. If the location is a sub-leased area, the Investor should know whether the original lessor of the lease contract allows them to sublease the location to any third party (which is the Investor, as the case maybe). In case of having the involvement of a representative of the lessor, the Investor should consider the representative’s right to enter and execute a lease contract, in addition to other considerations on the legal documents of the location, and the legal capacity of the lessor.

3. Investor’s business right at the location

In order to avoid the risks and potential harms in case the authority may reject or not allow the Investor in operating or expanding the business at such registering location while the Investor has executed the deposit or the lease contract, the Investor should check and ensure that at the proposed leased location, the Investor’s business rights could be fully and completely performed. It should be conducted by the Investor before entering any transaction with the lessor.

When applying for investment and enterprise registration, the Investor is required by competent authorities in providing information about the proposed location of operation with attached document proving the lawful use right of the Investor on such areas. In other words, determining whether an Investor is permitted to do business in a specific industry would be relied on the approval of a competent authority which is made after considering the legal documents and the legal right to use the location are required document to obtain approval from these agencies. However, it might be a challenge to the Investor because there is no legal ground confirming and ensuring that the investor is permitted to operate the expected business at the leased location right at the time the Investor and the lessor enter into the lease agreement. As a result, we would like to draw your attention in having a thoughtful verification the leased location and your eligible rights connected thereof.

The process of surveying and checking the leased location may take time to the Investor. However, CDLAF believes that a careful assessment would help the Investor avoiding the bad consequences, risks and disputes, and contributing a great value for the sustainable development in Vietnam.

Time of writing: 20/02/2023

The article contains general information that is of reference only; if you need official legal opinion on this topic or any other legal matters, please contact our lawyers at info@cdlaf.vn.