The dissolution of enterprises in Vietnam refers to the legal process by which a business entity officially ceases operations and is removed from the registry of businesses maintained by the Vietnamese government. The process is governed by the Law on Enterprises 2020 (effective from January 1, 2021), along with related regulations, and involves specific steps and legal requirements. Here is the Guidance on legal matters for enterprise dissolution in Vietnam
1. Cases for dissolution of enterprises
According to the provisions of Clause 1, Article 207, Law on Enterprise 2020, enterprises will be dissolved in the following cases:
- The enterprises’ operating period specified in the Company’s Charter expires without an extension decided by the owner of the private business, or owner of the company, the member’s council, or the general meeting of shareholders (hereinafter referred to as “Business Owner”).
- The enterprises are dissolved under a resolution of the Owner (for sole proprietorship), or the Board of Partners (for partnerships), or the Member’s Council or the Owner of the company (for limited liability companies) or the General Meeting of Shareholders (for joint stock companies).
- The enterprises failed to maintain the adequate number of members prescribed in the Law on Enterprises for 6 consecutive months without converting into another type of enterprise.
- The Enterprise Registration Certificate is revoked, unless otherwise prescribed by the Law on Tax Administration.
2. Conditions for dissolution of enterprises
Besides the provisions on the right to dissolve and terminate enterprises, the ‘Law on Enterprises’ also contains provisions aimed at protecting the legitimate rights and interests of entities related to the dissolved enterprise. In particular, the interests of creditors and employees of the business are protected.
Therefore, the conditions for the dissolution of the enterprises are prescribed by the Law on Enterprises as follows:
- Enterprises may only be dissolved after all their debts and liabilities are fully paid.
- Enterprises are not in any dispute currently being decided at the court or arbitration authority.
3. The order and procedures of dissolution of enterprises
Except in case the Enterprise is dissolved due to the enterprise registration certificate being revoked the dissolution of the enterprise shall be carried out according to the order and procedures by the Law on Enterprises, specifically:
Step 1: Approving the decision to dissolve the enterprise
An enterprise dissolution decision must contain the following principal details:
- Name and address of the head office of the enterprise;
- Reasons for dissolution;
- Time limit and procedures for contract liquidation and payment of debts of the enterprise; time limit for debt payment, liquidation contract must not exceed 06 months from the date of passing the dissolution decision;
- Plan to handle obligations arising from the labor contract;
- Full name and signature of the legal representative of the enterprise.
Step 2: Organization of liquidation of corporate assets
The private business owner, Board of members, or the company owner, the Board of Directors directly organizes the liquidation enterprise’s assets, except for the company’s charter regulations on the establishment of a separate liquidation organization.
Step 3: Send dissolution decision and meeting minutes
Within 07 working days from the date of adoption, the dissolution decision and the minutes of the meeting must be sent to the Business Registration Authority, the Tax Authority, employees in the enterprise, post the dissolution decision on the National Portal on Business Registration and must be publicly posted at the head office, branch, office representative office of the enterprise.
In case the enterprise has unpaid financial obligations, the debt settlement plan must be enclosed with the decision on dissolution.to creditors, who have interests and related obligations. The notice must contain the name and address of the creditor; debt amount, term, location, and the method of payment of such debt; method and time limit for settlement of creditors’ complaints.
Step 4: Update enterprise status
The Business Registration Authority must notify the Enterprise status is in the process of dissolution on the National Portal business registration right after receiving decided to dissolve the enterprise. Accompanied by the right notice post the dissolution decision and debt settlement plan (if any).
Step 5: Procedures for the Tax Authority
Enterprise sends official letters to tax authorities to apply for tax finalization and tax identification number.
- Send a written request for dissolution to the Tax Department (with a notarized copy)
- Certificate of Enterprise Registration and
- The tax registration certificate)
- Application letter for tax finalization
- Pay taxes owed
- Pay fines (if any)
After having the confirmation of no tax debt from the Tax Department where the enterprise is located the Tax Department decided to close the corporate tax code.
Step 6: Apply for dissolution of the enterprise
Within 7 days from the date of payment in full debts of the enterprise, the legal representative of the Enterprises must send dissolution registration documents to the agency business registration of the province where the enterprises head office is located. Components of the application for dissolution registration include:
- Notice of enterprise dissolution;
- Report on liquidation of corporate assets; list of creditors and the amount of debt paid, including the payment of all tax debts and owe money to pay social insurance premiums, employees after deciding to dissolve the enterprise (if any);
- Seal and seal sample certificate (if any);
- Business registration certificate.
Step 7: Change the status of the dissolution
Within 05 working days from the date of receiving the dissolution dossier, the Registration Office Business changes the legal status of the business in the National database on business registration to the state of dissolution if not receive the tax authority’s refusal, at the same time Notice of dissolution of the enterprise.
Prohibited activities since the decision to dissolve the enterprise is issued, it is strictly forbidden for enterprises and persons to Enterprise management performs the following activities:
- Concealing or dispersing property;
- Relinquish or reduce the right to collect a debt;
- Convert unsecured debts into debts secured by assets of the enterprise;
- Sign a new contract, except for the case of enterprise dissolution;
- Pledge, mortgage, donate or lease property;
- Terminate the performance of an effective contract;
- Mobilizing capital in any form.
Depending on the nature and seriousness of the violation, individuals may commit violations. The above prohibitions can be administratively sanctioned or prosecuted criminal responsibility; If damage is caused, compensation must be made.
Although it is stipulated in the Enterprise Law, dissolution procedures are pretty complicated in general because it has to go through many administrative agencies and perform various procedures, especially for large enterprises with many branches and business locations in different provinces. In addition, enterprises need to pay attention to the order of steps to deploy and notify officials; liability for contracts, transactions, and commitments for suppliers and partners; warranty liability for the goods; and dealing with industrial relations responsibilities to Avoid disputes that lead to The dissolution procedure is longer and more complicated.
Contact Our Legal Experts
At TLA, our experienced attorneys specialize in diverse legal fields, including criminal, civil, corporate, and family law. We provide comprehensive legal support and personalized advice.
For Expert Legal Consultation, Contact Us:
1. Lawyer Vu Thi Phuong Thanh – Director of TLA Law Firm, Hanoi Bar Association.
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le – Chairwoman of TLA Law Firm’s Members’ Council, Hanoi Bar Association.
Email: tmle@tlalaw.vn
Address: Floor 7, No. 6 Duong Dinh Nghe Street, Yen Hoa, Cau Giay, Hanoi
Website: https://tlalaw.vn/
Hotline: 0906246464
_Phi Ngoc Dung_