How does the law treat company established but inactive in Vietnam?
Currently, some companies registered to operate a business but then have no employees as well as business operations. How does the law handle these cases? Will the business registration certificate revoked and administrative violations handled? In this article, LSX legal firm will give you an insight into: “How does the law treat company established but inactive in Vietnam?”
Legal grounds
- Law on Enterprise 2020
- Decree 01/2021/ND-CP
How does the law treat company established but inactive?
Revocation of Certificate of Business Registration
The Law on Enterprise 2020 and related legal documents do not clearly stipulate that an enterprise must go into operation immediately after its establishment.
However, the Law on Enterprise 2020 stipulates the cases in which the Certificate of Business Registration is revoked as follows:
Article 212. Revocation of the Certificate of Enterprise Registration
1. An enterprise’s Certificate of Enterprise Registration shall be revoked in the following cases:
a) The enterprise registration application contains fraudulent information;
b) The enterprise is established by persons banned from establishing enterprises specified in Clause 2 Article 17 of this Law;
c) The enterprise suspended for 01 year without notifying the business registration authority and the tax authority;
d) 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;
dd) Other cases under decision of the court or request of competent authorities as prescribed by law.
2. The Government shall elaborate the procedures for revoking the Certificate of Enterprise Registration.
Thus, if your company stops doing business for 1 year without notifying the business registration office and tax office, the company will have its certificate of business registration revoked.
Administrative sanctions
In addition to having its business registration certificate revoked, that enterprise will also sanctioned for not carrying out the procedures for notification of business suspension under Article 32 of Decree 50/2016/ND-CP
A fine from 01-02 million VND for the following cases:
- Failing to notify or notify not on time to the business registration authority of the time and duration of business suspension or resumption;
- Registering for business suspension but not giving notice of suspension on the branch, representative office, or business location.
Will the company established but inactive forced to dissolve?
An enterprise is dissolved in the following cases:
- End of operation term stated in the company’s charter without a decision on extension;
- According to the decision of the business owner for a private enterprise; of all general partners in a partnership; the Board Members, and the company owner of a limited liability company; of the General Meeting of Shareholders for joint-stock companies;
- The company no longer meets the minimum number of members as prescribed by the Law for 06 consecutive months without carrying out procedures for conversion of business type;
- Having the business registration certificate revoked.
So, in case the company does not operate the business and has the business registration certificate revoked; then the company is required to perform the dissolution procedures.
LSX legal firm’s service on company establishment
When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
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.
Related article
Establish a Multi-member LLC under Vietnamese Law on Enterprise 2020
Fees to establish a Joint-stock company in Vietnam 2022
Conditions for foreigner to establish a company in Vietnam
Related questions
The company does not generate revenue from the business, but it still has to pay CIT if the company generates other legal revenue belonging to the income subject to corporate income tax (CIT).
There are many reasons that individuals and organizations have established companies but are not doing business. That means not organizing and operating the company to produce and generate profits.
It may be for financial reasons. After establishing a business, they found that there is not enough finance to operate the company. Therefore, owners have to stop all operations.
However, it may be due to objective conditions: epidemics, natural disasters, fires, etc. These unexpected reasons may cause the company to go out of business for a period of time; or even permanently discontinued.
Contact LSX
Finally, hope this article is useful for you to answer the question about “How does the law treat company established but inactive in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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