Decree 122 clarifies the definition of organization, imposes higher administrative penalties for many violations covered by it. It also adds a new sanction for over-declaration of the charter capital.
On 28 December 2021, the Government promulgated Decree No. 122/2021/ND-CP (Decree 122) regulating administrative violations in the fields of planning and investment. It entered into force on 1 January 2022 and supersedes Decree No. 50/2016/ND-CP (Decree 50).
This legal update will set out several remarkable changes under Decree 122. In general, most of the monetary fines are higher than those in the previous Decree.
1. Scope of Application and Corresponding Capped Penalties
Decree 122 summarises four different types of applicable scopes as were already covered by Decree 50 and adds one additional scope:
Violations against regulations on investment (including public investment, business investment in Vietnam, outward business investment, public-private partnership);
Violations against regulations on bidding;
Violation against regulations on business registration; and
Violation against regulations on planning.
Additionally, Decree 122 further imposes the following maximum fines for violations in each area:
Investments : VND 300,000,000.
Bidding: VND 300,000,000.
Business registration: VND 150,000,000.
Planning: VND 500,000,000.
2. Applicable Subjects Clarified
Decree 122 clarifies the definition of organisations mentioned in this Decree. An organisation shall include:
Joint-stock companies, single-member limited liability companies, partnerships and sole proprietorships incorporated and operating in accordance with the Law on Enterprise, Law on Investment, Law on Investment under the mode of Public-Private Partnership as well as other legal documents (Enterprises);
Foreign organisations, foreign enterprises, operating offices of foreign investors in BCC contracts, operating offices of foreign contractors in Vietnam;
Organisations incorporated and operating in accordance with the Law on Cooperatives; and
Other organisations committing administrative violations in the fields of planning and investment.
3. Subjects of Sanctions
Enterprises will be subject to administrative penalties for any violations committed by their branches, representative offices, business locations while the latter perform their businesses within the scope and under the authorisation of the Enterprises and under guidance, direction, assignment, approval of the Enterprise.
However, in case the branches, representative offices, business locations of the Enterprises commit violations while performing businesses beyond the authorisation or without guidance, direction, assignment, approval from the Enterprises, the head of branches, representative offices, business locations shall be subject to administrative penalties applicable to individuals.
4. Statute of Limitations
In addition to repeating the provisions on the statute of limitations specified in the Law on Handling Administrative Penalties, Decree 122 stipulates which administrative violations are ongoing1 and which ones are completed2. Therefore, it is easier to determine the statute of limitations of each administrative violation.
5. Added Sanction for Over-declaration of Charter Capital
Subject to the amount of overdeclared charter capital, different corresponding penalties will be applied. The maximum monetary penalty shall be up to VND 100 million. In particular, the following ranges will apply for the charter capital:
Under VND 10 billion: VND 20-30 million.
From VND 11-20 billion: VND 30-40 million.
From VND 20-50 billion: VND 40-60 million.
From VND 50-100 billion: VND 60-80 million.
Over VND 100 billion: VND 80-100 million.
As a remedial measure associated with the above penalties, the violator is compelled to register for amendment of the charter capital equal to the actually contributed charter capital.
1. An example of an ongoing violation is when an investor fails to comply with an ongoing obligation such as a periodical report during the project implementation.
2. An example of a completed violation is when an investor must prepare a research report before the investment/construction but fails to do so and the investment/construction is conducted without such report.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Source: CCIPV /ACSV Legal / Phuong Huynh and Ly Nguyen