Dissolving an enterprise involves terminating its legal status, including its rights and obligations. Whether voluntary or compulsory, the dissolution process follows specific procedures and requirements outlined by the law, depending on the type of business and its situation.
What is the Dissolution of Enterprises?
The dissolution of an enterprise refers to the process of ending the legal status of a company, including its rights and obligations. The decision to dissolve may be voluntary (initiated by the business itself) or compulsory (ordered by an authorized agency).
Companies undergoing dissolution—whether a joint-stock company, a one-member or multi-member limited liability company, or a sole proprietorship—can refer to this article for a detailed overview of the dissolution process.
Reasons for the Dissolution of Enterprises
According to the Enterprise Law, there are four cases in which an enterprise must undergo dissolution (either voluntarily or compulsorily):
- The expiration of the operating term as stated in the company’s charter, without an extension decision.
- A decision by the business owner for a sole proprietorship, all partners for a partnership, or the board of directors for a joint-stock company, the members’ council, or the owner of a limited liability company.
- The company fails to maintain the minimum required number of members for 6 consecutive months without converting to another business type.
- The company has its business license revoked (unless there are other provisions in tax management law).
However, before completing the dissolution procedure, the company must settle all debts and other financial obligations. Additionally, the company should not be involved in any ongoing disputes at a court or arbitration.
Dissolution Documentation for Enterprises
As mentioned, enterprise dissolution can be voluntary or compulsory, and each case has its own set of documents. Below are the necessary forms and documents required for each type of dissolution.
1. Voluntary Dissolution
Voluntary dissolution includes two sub-categories: businesses that have or have not issued invoices. Regardless of whether the company has generated revenue or not, it must submit documentation to both the tax authority and the Department of Planning and Investment (DPI), as follows:
➤ Documents for businesses with or without invoices sent to the tax authority:
Required documents include:
- A request to terminate the tax identification number.
- Confirmation of no outstanding customs duties.
- Minutes of the shareholders’ meeting (for joint-stock companies) or members’ council (for multi-member limited liability companies) on the decision to dissolve the company.
- The dissolution decision.
- Authorization letter.
➤ Documents for businesses with or without invoices sent to the Department of Planning and Investment (DPI):
Required documents include:
- A dissolution notice.
- The dissolution decision.
- Meeting minutes of the shareholders’ meeting or members’ council regarding dissolution.
- A list of employees.
- A list of creditors and payments made.
- A report on asset liquidation.
- Confirmation of returning the company seal to the police.
- Authorization letter.
2. Compulsory Dissolution
In the case of compulsory dissolution (as ordered by the court or when the business registration certificate is revoked), the required documents are similar to those for voluntary dissolution. However, the process is more complex and may vary depending on the specific circumstances of the compulsory dissolution.
Dissolution Procedure for Enterprises
1. Voluntary Dissolution
➤ For businesses that have not generated revenue or issued invoices:
After preparing the necessary documents, the steps to submit them to the tax authority and DPI are as follows:
a. Submit the documents to the tax authority
Step 1: Submit a request to confirm no outstanding taxes.
Step 2: Close the business’s bank account.
Step 3: Submit the dissolution documents to the local tax office.
Step 4: Submit other related reports (quarterly tax reports, final tax settlement, etc.).
b. Submit the dissolution documents to the DPI
Step 1: Submit a notice of dissolution on the national enterprise registration portal.
Step 2: Submit a notice that the business has been dissolved.
Step 3: Submit paper documents directly to the DPI and await the dissolution result.
➤ For businesses that have generated revenue and issued invoices:
The steps are similar to the non-revenue case, but the company must submit a notification of invoice cancellation to the tax authority, and the tax review process is more complex.
2. Compulsory Dissolution
Though compulsory dissolution is not divided into “with or without revenue,” it is often associated with a court decision. Thus, the process for compulsory dissolution is generally more complex than voluntary dissolution and will depend on the particular case.
➤ For businesses whose business registration certificate has been revoked:
Step 1: Upon receiving the decision to revoke the business registration certificate or the court’s dissolution decision, the business registration authority must notify that the company is undergoing dissolution on the national business registration portal.
Step 2: Within 10 days of receiving the revocation decision or the court’s dissolution decision, the company must hold a meeting to approve the dissolution decision, then submit it to the registration agency, tax authority, and stakeholders.
Step 3: Post the dissolution decision at the company’s headquarters and any branches or representative offices (if applicable).
Step 4: If all debts and financial obligations have not been settled, submit a settlement plan to creditors and relevant parties.
Step 5: Proceed with asset liquidation and debt settlement.
Step 6: Within 5 working days after settling all debts, submit the dissolution request to the DPI.
Step 7: The DPI will update the company’s legal status to “dissolved” on the national business registration system if no objections arise within 180 days from the notification of dissolution or within 5 working days of receiving the dissolution request.
➤ For companies that fail to meet the required number of members as stipulated for their business type:
If a company changes the number of its members but does not adjust its business type within 6 months, it will undergo compulsory dissolution. However, the process is similar to voluntary dissolution.
Note
Regardless of whether dissolution is voluntary or compulsory, any business must also dissolve its branches, representative offices, and business locations if they exist.
The dissolution of an enterprise, while a complex process, ensures that businesses fulfill their financial and legal obligations before closure. Whether initiated voluntarily by the company or mandated by external authorities, following the correct steps is crucial for a smooth and lawful termination of business operations.
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