A branch means a dependent unit of an enterprise, helping the enterprise to perform all or part of its functions. It is not difficult for companies to open branches in different regions. Opening branches helps businesses access more markets and increase competitive opportunities. However, some branches suffer a loss. So, in order to avoid affecting the general situation of the enterprise, the head can carry out dissolution procedures for those branches. In this article, LSX legal firm provides you with: “Dossiers for dissolution of branches in Vietnam”
Legal grounds
- Law on Enterprise 2020
- Decree 01/2021/ND-CP
Company branch under Vietnamese legislation
A branch of an enterprise means its dependent unit which has some or all functions of the enterprise, including authorized representative. The business lines of a branch shall match those of the enterprise.
Clause 11 Article 45 of the Law on Enterprise 2020 provides:
“An enterprise may establish branches and representative offices in Vietnam and other countries. An enterprise may have more than one branch and representative office in an administrative division.”
Accordingly, the law does not limit the number of branches of the enterprise. The branch placement can be done domestically and internationally.
A branch includes the following basic features:
- A branch has no legal status (According to Article 84 of the Civil Code 2015).
- Branch name: The name of a branch, representative office, or business location shall consist of the enterprise’s name and the phrase “Chi nhánh”, “Văn phòng đại diện” or “Địa điểm kinh doanh” respectively (Clause 2, Article 40 of the Law on Enterprise 2020).
- The business lines of the branch must be consistent with the business lines of the enterprise. In case an enterprise wishes to establish a branch to conduct business in different lines of business than that of the enterprise, the enterprise must carry out additional procedures for the branch or profession.
- The dependent business code of the enterprise shall be granted to the branch or representative office of the enterprise, this code is also the tax code of the branch or representative office.
Dissolution of branches
When maintaining the operation of the company branch becomes unnecessary or ineffective, the company may carry out procedures for the dissolution of the branch. Branch dissolution is a common name similar to enterprise dissolution, also known as branch termination.
Article 213 of the Law on Enterprise 2020 stipulates the dissolution of a branch. Specifically:
“1. Shutdown of branches, representative offices, business locations of an enterprise shall be decided by the enterprise or under a decision to revoke the certificate of branch/representative office registration issued by a competent authority.
- The enterprise’s legal representative and the head of the branch/representative office shall jointly take responsibility for the accuracy and truthfulness of the application for the shutdown of the branch/representative office/business location.
- The enterprise whose branch is shut down shall execute the contracts and pay the debts, including tax debts, of the branch and continue employing or fully provide lawful benefits for the branch’s employees as prescribed by law.”
Accordingly, it can be seen that the branch card awarding may come from the desired side of the enterprise or it may be due to the state when the certificate of branch operation registration is revoked.
Dossiers for dissolution of branches
It is extremely important to prepare documents to be submitted to the competent authority to terminate the branch operation. It greatly determines whether the enterprise can dissolve the branch or not. Before making the notification of branch dissolution to the competent authority, the company shall prepare the following documents:
- Firstly, notice of termination of the branch or representative office operation;
- Secondly, resolution, decision, and copy of meeting minutes of the Board of Members, for limited liability companies with two or more members, partnerships; of the Board of Directors for joint-stock companies; resolution, decision of the company owner, for a single-member limited liability company, on the termination of the branch or representative office operation.
- Thirdly, the police agency’s certification of the cancellation of the branch’s seal; or the written certification that the branch’s seal has not been engraved (for the case where the branch’s seal has not been engraved);
- Fourthly, the tax authority’s certification that the tax obligation fulfilled;
- Fifthly, list of creditors and unpaid debts, including tax debts of branches and social insurance premiums (reference form);
- The current list of employees and their respective benefits (reference form);
- The original Certificate of branch operation registration;
- Lastly, authorize the person to submit the application if not the legal representative.
Procedures for dissolution of branches
Completing tax obligations
Before notifying the shutdown of a branch/representative office/business location, the enterprise or its branch/representative shall fulfill tax liabilities with the relevant tax authority in accordance with regulations of the Law on taxation.
Send notice and dissolution dossiers of branch operation
Within 10 working days from the date of issue of the decision to shut down a branch/representative office/business location, the enterprise shall send a notification of the shutdown to the Business Registration Office of the province where the branch/representative office/business location located.
Receive, process, and return results
After receiving the application for the shutdown of a branch/representative office/business location, the Business Registration Office shall send information about the shutdown branch/representative office/business location to the tax authority. Within 02 working days from the receipt of information from the Business Registration Office, the tax authority shall give its opinions about the fulfillment of tax liabilities by the branch/representative office/business location to the Business Registration Office.
Within 05 working days from the receipt of the application for the shutdown of the branch/representative office/business location, the Business Registration Office shall perform a shutdown of the branch/representative office/business location on the National Enterprise Registration Database if it receives no objections from the tax authority and issue a notification of shutdown of the branch/representative office/business location.
The shutdown of an enterprise’s overseas branch/representative office shall comply with the law of the host country. Within 30 working days from the official date of the shutdown of an overseas branch/representative office, the enterprise must send written notification thereof to the Business Registration Office of the province where the enterprise headquartered. The Business Registration Office shall update information about the enterprise on the National Enterprise Registration Database within 03 working days from the receipt of the notification.
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Contact LSX
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Related questions
In terms of operational functions, if your company produces and supplies kinds of goods, you should set up a branch. If your company provides services, you should set up a representative office.
After you prepare all the documents and submit them to the Business Registration Office, within 03-05 working days, the Business Registration Office will process and then return the results of registration of the establishment of a company branch for you.
Branches of the company are allowed to perform the function of producing, trading goods, providing services as well as generating revenue and profits. Therefore, if the independent accounting method is applied, the branch will have to pay the license fee annually.
Conclusion: So the above is Dossiers for dissolution of branches in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
