Can a company be established but doesn’t operate businesses in Vietnam?
The growth of society leads to the development of different industries and business lines. This means that many organizations and businesses have been established with a large number in the market. The purpose of establishing a company is to make a profit; assert its position in the nation and foreign business arena. However, at present, there are also cases of establishing a company but not doing business. So, can a company established but don’t operate businesses in Vietnam?
Legal grounds
- Law on Enterprise 2020
- Decree 47/2021/ND-CP
Why company established but doesn’t operate businesses?
There are many reasons that individuals and organizations have established companies but are not doing business. That means not organizing and operating the company to produce and generate profits.
It may be for financial reasons. After establishing a business, they found that there is not enough finance to operate the company. Therefore, owners have to stop all operations.
However, it may be due to objective conditions: epidemics, natural disasters, fires, etc. These unexpected reasons may cause the company to go out of business for a period of time; or even permanently discontinued.
What happen to company that established but doesn’t operate businesses?
Revocation of the Business Registration Certificate
Article 212. Revocation of the Certificate of Enterprise Registration
1. An enterprise’s Certificate of Enterprise Registration shall be revoked in the following cases:
a) The enterprise registration application contains fraudulent information;
b) The enterprise is established by persons banned from establishing enterprises specified in Clause 2 Article 17 of this Law;
c) The enterprise suspended for 01 year without notifying the business registration authority and the tax authority;
d) The enterprise fails to send reports in accordance with Point c Clause 1 Article 216 of this Law to the business registration authority within 06 months from the deadline or from the receipt of a written request;
dd) Other cases under decision of the court or request of competent authorities as prescribed by law.
2. The Government shall elaborate the procedures for revoking the Certificate of Enterprise Registration.
Thus, if your company stops doing business for 1 year without notifying the business registration office and tax office, the certificate of business registration will be revoked.
Forced to dissolve the enterprise
In addition, Article 207 of the Law on Enterprise 2020 stipulates the following cases in which an enterprise must dissolve:
Article 207. Cases of and conditions for dissolution of enterprises
1. An enterprise shall be dissolved in the following cases:
a) The operating period specified in the company’s charter expires without an extension decision;
b) The enterprise is dissolved under a resolution or decision of the owner (for sole proprietorships), the Board of Partners (for partnerships), the Board of Members and the owner (for limited liability companies) or the GMS (for joint stock companies);
c) The enterprise fails to maintain the adequate number of members prescribed in this Law for 06 consecutive months without converting into another type of business;
d) The Certificate of Enterprise Registration is revoked, unless otherwise prescribed by the Law on Tax administration.
Accordingly, if your company has had its business registration certificate revoked; then your company must dissolve in order to the prescribed procedures.
Establishing a company but not doing business may cause administrative sanctions
The company may be sanctioned with each specific forfeit level specified in the current Law on handling administrative violations. So, if your company stops doing business for any reason, you have to go to the business registration office and the tax office to carry out certain procedures.
Firstly, if you just suspend your business, you must notify those two agencies for their management. If you suspend for 1 year, you may be able to not declare and pay taxes for that year.
Secondly, if you completely stop doing business, you have to carry out procedures for dissolution or bankruptcy in accordance with the law.
On the other hand, if you stop doing business without notifying any agency, the law will force the company to carry out procedures for dissolution or bankruptcy. Besides, not filing tax returns may also cause sanctions for administrative violation.
LSX legal firm’s service on establish a company
When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Using our service, you do not need to do the paperwork yourself. We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application; submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
Related articles
Searching for business registration of individual business household in Vietnam
Guidance on online business dissolution in Vietnam
Does tax declaration required for business suspension in Vietnam?
Related questions
The company does not generate revenue from the business, but it still has to pay CIT if the company generates other legal revenue belonging to the income subject to corporate income tax (CIT).
The List of members/partners of a limited liability company/partnership; the list of founding shareholders and foreign shareholders of a joint stock company shall contain:
Firstly, full names, signatures, nationalities, mailing addresses of members/partners/founding shareholders/foreign shareholders that are individuals;
Secondly, names, EID numbers, addresses of headquarters of members/partners/founding shareholders/foreign shareholders that are organizations;
Thirdly, full names, signatures, nationalities, mailing addresses or legal representatives or authorized representatives of members/partners/founding shareholders/foreign shareholders that are organizations;
Fourthly, stakes and values thereof, holdings, types, quantities and values of assets contributed as capital, capital contribution time of each member/partner (for limited liability companies and partnerships); types and quantities of shares, holdings, types, quantities and values of assets contributed as capital, capital contribution period of each founding shareholder and foreign shareholder (for joint stock companies).
Contact LSX
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