Consulting service for dissolution of foreign-invested enterprises in Vietnam

Currently, in the Vietnamese market, many foreign-invested enterprises exist with diverse types and industries. However, not all businesses can operate smoothly. For many reasons, economic organizations have to come to a decision to dissolve. The current dissolution of foreign-invested enterprises must adhere to the same regulations as domestic-invested enterprises. In this article, LSX legal firm provides: “Consulting service for dissolution of foreign-invested enterprises in Vietnam”

Legal ground

• Law on Enterprise 2020

Cases of company dissolution in Vietnam

An enterprise goes into dissolution in the following cases:

• Firstly, the operating period specified in the company’s charter expires without an extension decision.
• Secondly, 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).
• Thirdly, 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.
• Fourthly, the Certificate of Enterprise Registration is revoked, unless otherwise prescribed by the Law on Tax administration.

Conditions of company dissolution

An enterprise may only go into dissolution after fully paying all of its debts and liabilities. Besides, the enterprise must not get involved in any dispute at the court or arbitration. Relevant executives and the enterprise whose Certificate of Enterprise Registration revoked shall jointly take responsibility for the enterprise’s debts.

Resolution or decision on the dissolution of foreign-invested enterprises

Firstly, to conduct procedures for dissolution, the enterprise has to issue a resolution or decision on the dissolution. Such a resolution or decision shall contain the following information:

• The enterprise’s name and headquarters address.
• Reasons for dissolution.
• Time limit and procedures for finalization of contracts and payment of the enterprise’s debts.
• Plan for settlement of obligations under employment contracts.
• Full name and signature of the owner of the sole proprietorship, the company’s owner, the President of the Board of Members, the President of the Board of Directors.

Dissolution procedures of foreign-invested enterprises

Dissolution under Article 208 of the Enterprise Law:

• The owner of the sole proprietorship, the Board of Members, or the owner, the Board of Directors directly organizes the liquidation of the enterprise’s assets, unless the company’s charter requires establishment of a separate liquidation organization;
• Within 07 working days from the ratification date, the resolution or decision on dissolution and the minutes of the meeting shall be sent to the business registration authority, tax authority, and the enterprise’s employees. The resolution or decision shall be posted on the National Enterprise Registration Portal, displayed at the enterprise’s headquarters, branches, representative offices.
• In case the enterprise still has unpaid debts, the resolution or decision and the debt payment plan shall be sent to the creditors and persons with related rights, obligations, interest. The debt payment plan contains the creditors’ names, debts, repayment time, location, and method; method and time limit for settling creditors’ complaints;
• The business registration authority post a notification that an enterprise is undergoing dissolution, the dissolution resolution or decision, and debt payment plan (if any) on the National Enterprise Registration Portal right after the resolution or decision is received (if any);
• After the dissolution costs and debts have been fully paid, the remainder shall be divided among the owner, members/partners, shareholders in proportion to their stakes/shares;
• The enterprise’s legal representative applies for dissolution to the business registration authority within 05 working days from the day on which the enterprise’s debts fully paid;
• After 180 days from the receipt of the dissolution resolution or decision mentioned in Clause 3 of this Article without further comments from the enterprise or written objections from relevant parties, or within 05 working days from the receipt of the application for dissolution, the business registration authority update the enterprise’s status on the national enterprise registration database;

Payments of outstanding debts

The enterprise shall pay the outstanding debt before dissolution in the following order of priority:

• Unpaid salaries, severance pay, social insurance, health insurance, unemployment insurance premiums, and other benefits of employees under the collective bargaining agreement and concluded employment contracts.
• Tax debts.
• Other debts.

Dossier for dissolution

An application for dissolution of an enterprise shall consist of:

1. The notification of the enterprise’s dissolution;
2. The report on liquidation of the enterprise’s assets; list of creditors and paid debts, including tax debts, social insurance, health insurance, and unemployment insurance of employees after the dissolution decision is issued (if any).
3. Members of the Board of Directors (for joint stock companies), members of the Board of Members (for limited liability companies), the owner (for sole proprietorships), the Director/General Director, general partners, and legal representatives shall take responsibility for the accuracy and transparency of the application.
4. In case the application contains inaccurate or false information, the persons specified in clause 2 shall jointly provide the outstanding employees’ benefits, taxes, and other debts and bear personal responsibility for the consequences that occur within 05 years from the day on which the application submitted to the business registration authority.

Actions prohibited from the issuance date of the dissolution decision

Article 211. Actions prohibited from the issuance date of the dissolution decision

From the issuance date of the dissolution decision, the enterprise and its executives prohibited from the following actions:
a) Concealing, and disguising assets;
b) Denying or reducing the creditors’ claims to the debts;
c) Convert unsecured debts into debts secured with the enterprise’s assets;
d) Concluding new contracts, except for dissolving the enterprise;
dd) Pledging, donating, and leasing out assets;
e) Terminating effective contracts;
g) Raising capital in any shape or form.
The persons who commit the violations mentioned in Clause 1 of this Article, depending on their nature and seriousness, will held liable to administrative penalties or criminal prosecution and pay damages.

In what cases does an enterprise’s Certificate of Enterprise Registration revoked?

The competent authority may revoke an enterprise’s Certificate of Enterprise Registration in the following cases:

• Firstly, the enterprise registration application contains fraudulent information.
• Secondly, the enterprise is established by persons banned from establishing enterprises specified in Clause 2 Article 17 of the Law on Enterprise 2020.
• Thirdly, the enterprise is suspended for 01 year without notifying the business registration authority and the tax authority.
• Fourthly, 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.
• Other cases under the decision of the court or request of competent authorities as prescribed by law.

Legal service of LSX Legal Firm

LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:

• Legal advice related to new regulations;
• Representing in drafting and editing documents;
• We commit the papers to be valid, and legal for use in all cases;
• Represent to submit documents, receive results, and hand them over to customers.

With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.

Furthermore, 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.

Contact LSX

This article contains information about “Consulting service for dissolution of foreign-invested enterprises in Vietnam” In recent years, we have supplied effective legal advice to businesses and individuals at reasonable prices and with efficient results. We always update and keep our operations and services in line with the law by adhering to legal principles. If you need any further information from the firm’s solicitors, please contact  LSX Law firm: +84846175333 or Email: [email protected]

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Frequently asked questions

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