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Dissolution of enterprises according to the latest Enterprise Law in Vietnam

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Facing the situation of the Covid-19 pandemic, the company’s operation situation is no longer as positive as before; due to a number of mandatory conditions prescribed by law, it is not possible to maintain the operation any longer; One of the best measures that businesses will choose to solve the above problem is to dissolve the business. So what is corporate dissolution? Under what circumstances must the enterprise be dissolved? Join LSX Lawfirm to learn about Dissolution of enterprises according to the latest Enterprise Law in Vietnam.

Law on enterprise 2020

Decree No. 01/2021/ND-CP

What is enterprise dissolution?

The Enterprise Law 2020 does not have a specific regulation on the concept of “dissolution of enterprises”. However, through the phrase “dissolution”, we can understand that: Enterprise dissolution is when an enterprise is no longer able to operate and submits a dossier to a competent authority to terminate its existence. at that enterprise.

Cases of enterprise dissolution in Vietnam

Based on the cause of dissolution, the dissolution of enterprises divided into cases of voluntary dissolution and compulsory dissolution.

Voluntary dissolution based on the voluntary will of the company, the business will terminate in the following cases:

  • The term of operation stated in the company’s charter expires without a decision on extension.
  • Accordingly resolutions and decisions of business owners for private enterprises; of the Members’ Council, for partnerships; of the Members’ Council, the company owner, limited liability companies; the General Meeting of Shareholders for joint-stock companies.

Compulsory dissolution is the termination of the existence of an enterprise according to the will of competent state agencies, including the following cases:

  • So, the company no longer meets the minimum number of members as prescribed by the Law on Enterprises for a period of 06 consecutive months without carrying out procedures for converting the type of enterprise.
  • The Certificate of Business Registration revoked, unless otherwise provided by the Law on Tax Administration.

Conditions for enterprise dissolution in Vietnam

Two prerequisites for the dissolution of the latest enterprise under the Enterprise Law 2020: The first is to ensure payment of all debts and other property obligations; The second is not during the dispute resolution process in Court or Arbitration.

In case the enterprise is dissolved due to the enterprise registration certificate being revoked, the relevant manager and the enterprise are jointly responsible for the debts of the enterprise.

Enterprise dissolution profile in Vietnam

Components of the latest enterprise dissolution dossier under the current Law, include:

  • Notice of dissolution of the enterprise
  • Then Resolution, decision and copy of the meeting minutes of the Owner; Council members; General Meeting of Shareholders (depending on the type of business)
  • Report on liquidation of corporate assets
  • Then List of creditors and the amount of debt paid; including paying off tax debts; owe social insurance premiums; Health Insurance; unemployment insurance for employees after deciding to dissolve the enterprise (if any)
  • Then Seal and seal sample certificate (if any)
  • Certificate of business registration.

You can also refer to the article related to Procedures of dissolution of state enterprises in Vietnam.

Related articles:

State management of enterprise registration in Vietnam

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Order and procedures for enterprise dissolution

Step 1: Pass the resolution, decide to dissolve the enterprise

A resolution or decision on dissolution of an enterprise must contain the following principal contents:

  • Name and address of the head office of the enterprise;
  • Reason for dissolution;
  • Time limit and procedures for contract liquidation and payment of debts of the enterprise;
  • The plan to handle obligations arising from the labor contract;
  • Full name and signature of the owner of the private business; Company owner; Chairman of the Members’ Council; Chairman of the board.

Step 2: Organize the liquidation of corporate assets

Private business owner; Council members; Company owner; The Board of Directors directly organizes the liquidation of the enterprise’s assets; unless the company’s charter stipulates the establishment of a separate liquidation organization.

Step 3: Send resolutions, decisions and meeting minutes

So, within 07 working days from the date of adoption, the resolution, dissolution decision and meeting minutes must be sent to the business registration agency; tax authorities; employees in the enterprise. It must also be posted on the National Business Registration Portal; publicly listed at the head office, branches and representative offices of the enterprise.

In case the enterprise still has unpaid financial obligations, it must enclose it with the resolution or decision on dissolution; so debt settlement plans to creditors, persons with related rights, obligations and interests. Then the debt settlement plan must have the name and address of the creditor; debt amount, term, location and method of payment of such debt; method and time limit for settling the creditor’s complaint.

Step 4: Announce business status

So, the business registration authority must notify the state of the enterprise undergoing dissolution procedures on the National Enterprise Registration Portal right after receiving the resolution or decision on dissolution of the enterprise; Enclosed with the notice must post the resolution, dissolution decision and debt settlement plan (if any).

Step 5: Pay the debts of the business

The debts of the enterprise pay in the order of priority as follows:

  • So, debts of salary, severance allowance, social insurance, health insurance, unemployment insurance according to the provisions of law; other benefits of employees under the collective labor agreement and signed labor contract;
  • Tax debt;
  • Other debts.

After all debts as well as business dissolution costs pay, the remainder shall divide among private business owners; members and shareholders; company owners in proportion to their ownership of contributed capital or shares. It related to Dissolution of enterprises according to the latest Enterprise Law in Vietnam.

Step 6: Submit application for dissolution of the enterprise

So, within 05 working days from the date of payment of all debts of the enterprise, the legal representative of the enterprise shall have to send the enterprise dissolution dossier to the business registration agency.

Step 7: Update the status of the enterprise to be dissolved

So, after 180 days from the date of receipt of the resolution or decision on dissolution, the tax authorities and employees of the enterprise; Then the concerned parties have no opinion or objection on the dissolution of the enterprise or within 05 working days from the date of receipt of the dissolution dossier. At that time, the business registration authority updates the legal status of the enterprise on the National Database of Business Registration to the dissolved status.

Prohibited activities since business dissolution in Vietnam

Since the decision to dissolve the enterprise issued, the enterprise and its manager strictly prohibited from performing the following activities:

  • Conceal or dispersing property;
  • Waive or reduce the right to collect debt;
  • So, Convert unsecured debts into secured debts with assets of the enterprise;
  • Sign a new contract (except for the case of enterprise dissolution);
  • Then Pledge, mortgage, gift or lease of property;
  • Termination of performance of an effective contract;
  • Raise capital in any form.

So, depending on the nature and seriousness of the violation, individuals committing such violations may be administratively sanctioned or examined for penal liability. If causing damage, they must pay compensation.

Deadline to submit dissolution documents?

The enterprise’s legal representative shall send the enterprise dissolution dossier to the business registration agency within 05 working days from the date of payment of all debts of the enterprise.

After all debts have been paid for dissolution, how will the remaining assets of the company be settled?

After the dissolution costs and debts have been paid, the remainder shall be divided among the private business owners, members, shareholders or company owners according to the percentage of ownership of contributed capital or shares.

Which agency has the authority to request the dissolution of an enterprise?

The business registration agency has the authority to handle violations of the law on business registration; revoke the certificate of enterprise registration and request the enterprise to carry out dissolution procedures in accordance with the provisions of the Law on Enterprise 2020.
– Competent Courts to issue decisions to request dissolution of enterprises (Article 209 Enterprise Law 2020)

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