Enterprises in Viet Nam can be organized in certain forms according to Law on Enterprises, such as Full division, Partial division, Consolidation, and Acquisition. Let’s find out these forms of reorganization of enterprises with Lawyer X through the following scenario: “Dear Lawyer! I want to learn more about how shall enterprises in Viet nam be organized? What procedures are there to reorganized enterprises? Thanks for answering me!”
Legal grounds
Viet Nam Law on Enterprises
Full division
– Full division is the situation in which a limited liability company or joint stock company (the divided company) divides its assets, rights, obligations, members/shareholders to establish two new companies or more.
– Full division procedures:
+ The Board of Members, the owner or General Meeting of Shareholders of the divided company shall ratify the resolution or decision on fully division of the company in accordance with Law on Enterprises and the company’s charter. The resolution or decision shall contain the name and headquarters address of the divided company; names of the new companies; rules and procedures for division of the company’s assets; employment plan; method for division; time limit and procedures for transfer of shares/stakes to the divided company to the new companies; rules for settlement of the divided company’s obligations; division time. This resolution or decision shall be sent to all creditors and employees within 15 days from its issuance date or ratification date;
+ The members, owner or shareholders of each new company shall ratify its charter, elect or designate the President of the Board of Members, President of the company, Board of Directors, the Director/General Director and apply for enterprise registration in accordance with Law on Enterprises. The enterprise registration application of the new company shall be enclosed with the full division resolution/decision mentioned in Point a of this Clause.
– The quantity of members or shareholders, their holdings of shares/stakes and charter capital of the new company shall be written according to the full division resolution/decision.
– The divided company shall cease to exist after the new companies are granted the Certificate of Enterprise Registration. The new companies shall be jointly responsible for unpaid debts, unfulfilled liabilities, employment contracts and other obligations of the divided company or reach an agreement with the divided company’s creditors, clients and employees that one of the new companies will fulfill these obligations. The new companies obviously inherit all rights, obligations and lawful interests of the divided company under the full division resolution/decision.
– The business registration authority shall update the status of the divided company in the national enterprise registration database when issuing the Certificate of Enterprise Registration to the new companies. In case a new company is headquartered outside the province in which the divided company is headquartered, the business registration authority of the province in which the divided company is headquartered shall make the update.
Partial division
– A limited liability company or joint stock company may be partially divided by transfer part of the divided company’s assets, rights, obligations, members/shareholders to one or some new limited liability companies or joint stock companies without ceasing the existence of the divided company.
– The divided company shall register the change in charter capital, quantity of members/shareholders in proportion to the decrease in the stakes/shares and quantity of members/shareholders and apply for registration of the new companies.
– Partial division procedures:
+ The Board of Members, the owner or General Meeting of Shareholders of the divided company shall ratify the resolution or decision on fully division of the company in accordance with Law on Enterprises and the company’s charter. The resolution or decision on partial division of the company shall contain the name and headquarters address of the divided company; name of each new company; employment plan; method for division; values of assets, rights and obligations transferred from the divided company to the new company/companies; division time. This resolution or decision shall be sent to all creditors and employees within 15 days from its issuance date or ratification date;
+ The members, owner or shareholders of each new company shall ratify its charter, elect or designate the President of the Board of Members, President of the company, Board of Directors, the Director/General Director and apply for enterprise registration in accordance with Law on Enterprises.
– After applying for registration, the divided company and the new company/companies shall be jointly responsible for unpaid debts, employment contracts and other obligations of the divided company or unless otherwise agreed upon by the divided company, the new company/companies, the divided company’s creditors, clients and employees. The new company/companies obviously inherit all rights, obligations and lawful interests that are transferred under the partial division resolution/decision.
– Two or more companies (consolidating companies) may be consolidated into a new company (consolidated company), after which the consolidating companies shall cease to exist.
– Consolidation procedures:
+ The consolidating companies shall prepare the consolidation contract and charter of the consolidated company. The contract shall contain the names and addresses of the consolidating companies; name and address of the consolidated company; procedures and conditions for consolidation; employment plan; deadline and conditions for transfer of assets, shares/stakes, bonds of the consolidating companies to the consolidated company; consolidation time;
+ The members, owners or shareholders of the consolidating companies shall ratify the consolidation contract, the consolidated company’s charter, elect or designate the President of the Board of Members, President of the company, Board of Directors, the Director/General Director of the consolidated company and apply for registration of the consolidated company in accordance with Law on Enterprises. The consolidation contract shall be sent to the creditors and employees within 15 days from the day on which it is ratified.
– The consolidating companies shall comply with regulations Competition Law on consolidation of companies.
– After the consolidated company is registered, the consolidating companies shall cease to exist. The consolidated company shall inherit the lawful rights and interests, liabilities, unpaid debts, employment contracts and other obligations of the consolidating companies under the consolidation contract.
– The business registration authority shall update the status of the consolidating companies to the national enterprise registration database when issuing the Certificate of Enterprise Registration to the consolidated company. In case the consolidating companies are headquartered outside the province in which the consolidated company is headquartered, the business registration authority of the province in which the consolidated company is headquartered shall make the update.
Acquisition of companies
– One or some companies (acquired companies) may be acquired by another company (acquiring company) by transfer all of the acquired company’s assets, rights, obligations and lawful interests to the acquiring company, after which the acquired company shall cease to exist.
– Acquisition procedures:
+ The acquiring company and acquired company shall prepare the acquisition contract and draft the charter of the acquiring company. The contract shall contain the name and address of the acquiring company; name and address of the acquired company; procedures and conditions for acquisition; employment plan; method, procedures, deadline and conditions for transfer of assets, shares/stakes, bonds of the acquired company to the acquiring company; acquisition time;
+ The members, owners or shareholders of the companies shall ratify the acquisition contract and the acquiring company’s charter and apply for registration of the acquiring company in accordance with Law on Enterprises. The acquisition contract shall be sent to the creditors and employees within 15 days from the day on which it is ratified;
+ After the acquiring company is registered, the acquired companies shall cease to exist. The acquiring company shall inherit the lawful rights and interests, liabilities, unpaid debts, employment contracts and other obligations of the acquired company under the acquisition contract.
– The companies shall comply with regulations Competition Law on consolidation of companies during the acquisition process.
– The business registration authority shall update the status of the acquired company to the national enterprise registration database and revise the Certificate of Enterprise Registration of the acquiring company. In case the acquired company is headquartered outside the province in which the acquiring company is headquartered, the business registration authority of the province in which the acquiring company is headquartered shall request the business registration authority of the province in which the acquired company is headquartered to make the update.
– Other responsibilities prescribed by Law on Enterprises and the company’s charter.
Dismissal and discharge of Controllers and the Chief Controller
– The Chief Controller or a Controller shall be dismissed in the following cases:
+ He/she no longer fully satisfies the requirements specified in Article 103 of Law on Enterprises;
+ He/she hands in the resignation and is accepted by the state ownership representative body;
+ He/she is reassigned by the state ownership representative body or another competent authority;
+ Other cases prescribed by the company’s charter.
– The Chief Controller or a Controller shall be discharged from duty in the following cases:
+ He/she fails to perform his/her duties for 03 consecutive months, except in force majeure events;
+ He/she fails to perform his/her duties for 01 year;
+ He/she commits multiple, serious violations against the rights and obligations of a Controller or the Chief Controller prescribed by Law on Enterprises and the company’s charter;
+ Other cases prescribed by the company’s charter.
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Frequently asked questions
The Board of Members, the owner or General Meeting of Shareholders of the divided company shall ratify the resolution or decision on fully division of the company in accordance with Law on Enterprises and the company’s charter.
The resolution or decision shall contain the name and headquarters address of the divided company; names of the new companies; rules and procedures for division of the company’s assets; employment plan; method for division; time limit and procedures for transfer of shares/stakes to the divided company to the new companies; rules for settlement of the divided company’s obligations; division time.
Yes! This resolution or decision shall be sent to all creditors and employees within 15 days from its issuance date or ratification date;
Conclusion: So the above is Reorganization of Enterprises according to Viet Nam Law on Enterprises. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
