Procedures for business suspension of multi-member LLC in Vietnam
Currently, during the Covid-19 pandemic, many business establishments face difficulties leading to bankruptcy. They need time off from their business to avoid future damage. Thus, many business owners decided to carry out procedures for business suspension. However, each type of company has different procedures when suspending business. So, in this article LSX legal firm will guide you with: “Procedures for business suspension of multi-member LLC in Vietnam”
Legal ground
- Law on Enterprise 2020
Multi-member Limited Liability Company (LLC)
A limited liability company with two or more members (Multi-member LLC): a type of enterprise in which the members only responsible for the debts or other financial obligations of the enterprise to the extent of the capital contributed by the members. In addition, a limited liability company with two or more members has its legal status, same to a single-member limited liability company.
A limited liability companies with two or more members have a maximum of 50 members and limited capital mobilization because this type of company cannot raise capital by issuing shares.
According to the Law on Enterprise 2020:
“Article 46. Multi-member limited liability companies
1. A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise, except for the cases specified in Clause 4 Article 47 of this Law. The member’s stake (contributed capital) may only be transferred in accordance with Articles 51, 52 and 53 of this Law.
2. A multiple-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
3. Multiple-member limited liability companies must not issue shares except for equitization.
4. Multiple-member limited liability companies may issue bonds in accordance with this Law and relevant laws; private placement of bonds shall comply with Article 128 and Article 129 of this Law.”
Business suspension
Business suspension understood as a case where an enterprise suspends production and business activities for a certain period of time. Besides, businesses must notify in writing of the time to start and duration of the suspension.
On the other hand, clause 1, Article 41 of Decree No. 01/2021/ND-CP stipulates business suspension as follows:
“1. “business suspension” means the enterprise’s legal status during its business suspension as prescribed in Clause 1 Article 206 of the Law on enterprises. Starting date of “business suspension” status is the date of business suspension registered by the enterprise. Ending date of “business suspension” status is the ending date of business suspension period as notified by the enterprise or the date of resumption of business ahead of schedule registered by the enterprise.”
One outstanding advantage of suspending business is that when the business resumes operations, the procedure is very simple. In case the suspension period expires, the business will resume operation by itself, and if the business wants to resume earlier than the suspension period, it only needs to make a written notice.
Requirements before proceeding with the suspension
Before carrying out the procedure to suspend the business of a multi-member limited liability company, the company needs to complete sending a notice of suspension to the business registration office where the head office located or at the location where the company has registered.
Besides, the company must send a notice at least 15 days before the date of suspension.
Procedures for business suspension of multi-member limited liability company (LLC)
Prepare dossiers for business suspension of multi-member LLC
Firstly, a notice of business suspension;
Secondly, the decision of the Board of Members on business suspension;
Thirdly, a copy of the meeting minutes of the Board of Members on business suspension;
Fourthly, power of attorney for individuals to carry out the procedures (if enterprises cannot do it themselves);
Lastly, a copy of the company’s business registration certificate (if any).
Ways to apply
Method 1: Submit the application directly to the Business Registration Office of the Department of Planning and Investment of the province or city where the enterprise is located.
Method 2: submitting dossiers online at dangkykinhdoanh.gov.vn
Steps to carry out the procedure
Step 1: Prepare a complete set of dossiers as mentioned above.
Step 2: Submit an online application to the Business Registration System or the Department of Planning and Investment.
Then, step 3: Within 03 days, the Business Registration Office will notify the application result:
- In case the application is valid, the enterprise will receive the result by post or receive it directly at the business registration office.
- In case the dossier is invalid, the enterprise shall amend the dossier according to the notice of amendment. Then, resubmit it on the Business Registration System or submit it to the Business Registration Office.
Business suspension service of LSX Legal Firm
Business suspension-a necessary solution for businesses when they cannot continue doing business for a specified period of time. Suspending business quickly will help businesses avoid unnecessary costs. Meanwhile, the business suspension process contains complicated procedures so if businesses do it themselves, they will face many risks. Using the business suspension service of LSX will make you feel secure in each stage of implementation.
To make your case more convenient, LSX will perform:
- Legal advice related to new regulations in business suspension;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
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.
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Related questions
After the end of the business suspension period, if the business continues to suspend, it must send a second notice to the Business Registration Office.
The total time to suspend business in consecutive times must not exceed 2 years.
Capital cannot be raised by issuing shares, for joint-stock companies, the issue of shares is a very good channel to raise capital from the idle money of investors. However, limited liability companies with 2 or more members can not raise capital by this method.
Since the capital contributors are only liable for the company’s debts, they will not be as valuable as a joint-stock company when applying for a loan at a bank.
Company members only responsible for the company’s activities within the amount of capital contributed to the company, thus minimizing risks for capital contributors and at the same time separating assets between capital contributors and the company.
The members are usually acquaintances and trust each other, so it is easier to manage and run the company.
The capital transfer regime regulated strictly. So investors can easily control the change of members and limit the penetration of strangers into the company. Also, members who want to transfer capital will have to give priority to the remaining members of the company first
Contact LSX
Finally, hope this article is useful for you to answer the question about “Procedures for business suspension of multi-member LLC in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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