In order for a foreign investor to completely terminate his/her legal rights and obligations; the investor must complete the order and procedures for enterprise dissolution accordingly the Enterprise Law. These regulations are specified in the Enterprise Law 2020. LSX Lawfirm would like to summarize some steps of dissolution of enterprises with foreign capital as follows.
Enterprise Law 2020
Decree 01/2021/ND-CP dated January 4, 2021;
Circular 01/2021/TT-BKHDT dated 16/03/2021.
Cases and conditions for dissolution of enterprises with foreign capital
End of operation term stated in the company’s charter without decision on extension;
Accordingly the decision of the business owner, for a private enterprise, of all general partners, for a partnership, of the Members’ Council, of the company owner, for a limited liability company , of the General Assembly, shareholders’ council for joint-stock companies;
Besides, the company no longer meets the minimum number of members as prescribed by this Law for a period of 06 consecutive months without carrying out procedures for transformation of enterprise type;
The enterprise only dissolves when it ensures payment of all debts and other property obligations and is not in the process of settling disputes at Court or Arbitration.
In addition, the relevant manager and the enterprise whose enterprise registration certificate has been revoked are jointly responsible for the debts of the enterprise.
Order and procedures for dissolution of enterprises with foreign capital
Step 1 : The enterprise passes a resolution and decides to dissolve the enterprise
A resolution or decision 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 enterprise; the company owner; the Chairman of the Members’ Council; the Chairman of the Board of Directors.
Step 2: Send dissolution documents to competent state agencies
Within 07 working days from the date of adoption, the resolution, resolution on dissolution; and meeting minutes must be sent to the business registration agency; tax agency, and employees in the enterprise. Resolutions and decisions on dissolution need being poste on the National Portal on enterprise registration; and publicly posted at the enterprise’s head office; branches and representative offices.
In case the enterprise has unpaid financial obligations, it must enclose the resolution, dissolution decision and debt settlement plan to its creditors, persons with related rights, obligations and interests. The debt settlement plan also must have the name and address of the creditor; debt amount, term, place and method of payment of such debt; method and time limit for settling the creditor’s complaint.
Step 3: Liquidation of company assets
A private enterprise, the Members’ Council or the company’s owner or the Board of Directors shall directly organize the liquidation of the enterprise’s assets; unless the company’s charter provides for the establishment of a separate liquidation organization.
Step 4: Proceed with the procedure to close the company tax code
Depending on the reality of the enterprise’s accounting records, the procedure to close the tax code will last from 06 months or more (excluding the procedures for penalties, violations, and late submission);
Besides, n the process of carrying out tax finalization procedures, enterprises carry out procedures for reducing labor; and settling relevant regimes for employees within the time limit specified in the Labor Code.
Step 5: Return the stamp (round carpentry) of the company
In case a police agency issue the enterprise’s seal; the enterprise shall carry out procedures for returning the seal at the issuing agency.
Step 6: Return the business registration certificate, terminate the project operation
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.
Termination of investment projects
If a foreign-invested enterprise is granted an Investment Registration Certificate; or equivalent document; apart from carrying out the procedures for dissolution of the enterprise the investor shall notify; and return the Investment Registration Certificate within 15 days from the date of termination of operation of the investment project, also enclosed with a copy of the document recording the termination of operation of the investment project. The investment registration authority also shall notify the termination of operation of the investment project to the relevant agencies.
After 180 days from the date of sending the dissolution decision to the Department of Planning and Investment; Besides, if there is no objection from the parties and the enterprise has completed the above steps; within 5 working days, the Business Registration Authority will Update the legal status of the business on the National Database of Business Registration.
The law does not specifically stipulate how many years an enterprise must operate; before being dissolved.
Enterprises have the right to dissolve accordingly the cases prescribed by the Law on Enterprises.
The debts of the enterprise are prioritized for payment as follows:
Firstly, salary arrears; severance allowance; social insurance, health insurance, unemployment insurance and other benefits of employees under the collective labor agreement and labor contract; signed act
Secondly, tax debt;
Lastly, other debts;
Afterward, paying the costs of dissolution of the enterprise; and debts the remainder shall be divided; among the owners of the private enterprise; members; shareholders or owners of the company accordingly the percentage of ownership of contributed capital or shares.