Today, LSX Lawfirm will give you an article about: “Division and separation of enterprises according to Vietnamese law”, as follows:
Law on enterprises 2020
Business division and separation are activities to help improve business efficiency. In fact, many people confuse these two concepts with each other. However, from these two activities, there are many differences from concept to procedure.
The concept of division and separation of businesses
Division enterprises according to Vietnamese law
Accordingly, Enterprise division is a joint stock company, a limited liability company divided into many companies of the same type. The company divided through a decision of the General Meeting of Shareholders, the Board of Members or the owner.
After then the new companies register for business, the divided company ceases to exist. Then for unpaid debts, employment contracts or related assets, the related companies will be jointly liable. Or can come to an agreement to solve these problems.
Separation of business according to Vietnamese law
So, Separation of an enterprise is a joint-stock company, a limited liability company that transfers part of the assets of an existing business to establish one or several new companies. This decision agreed upon by the General Meeting of Shareholders, the owner or the Members’ Council.
After then the business registered, the separated company and the separated company jointly responsible for unpaid debts, contracts or assets, etc.
Similarities between division and separation of businesses
- So, objects for division and separation of enterprises are joint stock companies and limited liability companies.
- The companies after divided and separated are of the same type as the previous company.
- After the division or separation, the related companies still have to be responsible to the previous company. Debts, employment contracts, financial obligations are all shared responsibility.
- Finally, the legal procedures for division and separation are almost the same. From the paperwork to the steps to perform these two activities are quite similar.
You can also refer to the article related to company division in Vietnam, or Registration company in Vietnam after a full or partial division, Cease existence of divided company in Vietnam or Names of Vietnam’s branches and representative offices.
The company is divided into many companies of the same type
A -> B + C
In which: A. the company is divided
B, C. new company
A business that separates by transferring part of its existing assets to form one or more new companies
A -> A + OVER
In which: A. the company is separated
B. new company
It is easy to see that the division of the business will lead to the loss of the old business, while the separation of the enterprise will keep the old one and establish a new one.
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