Procedures for business suspension of single-member LLC in Vietnam
Many enterprises when facing a difficult economic situation, unable to finance their business activities, but still want to operate in the future. At this time, businesses have the optimal option to suspend business. However, each type of company has different procedures when suspending the business. So, in this article LSX legal firm would like to provide you with: “Procedures for business suspension of single-member LLC in Vietnam”
Legal ground
- Law on Enterprise 2020
Single-member LLC
Single-member limited liability company: a company with only one member (owner) as an organization or an individual. The characteristics of this type of business can be seen clearly from the name. The law also clearly stipulates that, with this type of business, the owner of the company has limited liability for the company’s debts and property obligations to the extent of the company’s charter capital.
“Article 74. SINGLE-MEMBER LIMITED LIABILITY COMPANIES
1. A single-member limited liability company is an enterprise owned by a single organization or individual ((hereinafter referred to as “owner”). The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital.
2. A single-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
3. A single-member limited liability company must not issue shares except for equitization.
4. Single-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.”
Not like a Sole proprietorship, a Single-member limited liability company has legal status from the date of issuance of the business registration certificate although they all established by only one founder.
Besides, the law limits the ability to mobilize capital of a Single-member LLC more than a joint-stock company. Because Single-member limited liability companies can not issue shares to raise capital.
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.
Term of suspension of business
The duration of the business suspension shall not exceed 1 year. After the notice period expires, if the enterprise, branch, representative office, or business location continues to suspend business, then it must further notify the Business Registration Office. Similarly, the extension period must not exceed 1 year.
Thus, the maximum consecutive suspension period cannot exceed 2 years.
Things need to notice for business suspension
Do not handwrite application forms. Also, dossiers and copies of personal identification papers, practice certificates, and accompanying papers must be made in A4 size paper;
An enterprise that suspends a business must notify in writing to the business registration office where it has registered and the tax office at least 15 (fifteen days) before suspending its business.
Procedures for business suspension of single-member limited liability company (LLC)
Prepare dossiers for business suspension of single-member LLC
Firstly, a notice of business suspension;
Secondly, the decision of the business owner on business suspension;
Thirdly, power of attorney for individuals to carry out the procedures (if enterprises cannot do it themselves);
Fourthly, 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 Office of the Department of Planning and Investment. The specialist will check that the application is complete with the required documents, receives the application, and then issues a receipt for the business.
Step 3: The Business Registration Office checks the validity of the application and processes the enterprise’s application.
Step 4: Based on the appointment date on the Receipt, the enterprise goes to the Business Registration Office to receive the results of the application.
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
Within 03 working days from the date of receipt of a valid application, the application-receiving agency will consider and handle the request.
Under Article 87 of the Law on Enterprise 2020, a company may not decrease its charter capital if it has not operated for at least 02 consecutive years from the enterprise registration date.
Difficult to raise capital, when wanting to increase or decrease charter capital, it can only be done by the owner contributing additional capital or receiving capital from new members ((In this case, the business must change to a limited liability company with 2 or more members).
Must not raise capital by issuing shares. For joint-stock companies, the issue of shares contributes to raising capital from investors. However, this mobilization channel is limited to Single-member limited liability companies.
The owner only takes liability for the debts of the company to the extent of his/her capital contribution (similar to a joint-stock company and a partnership). When problems affect the company such as bankruptcy, debt, etc., the law limits the owner’s risk.
The company’s members are usually family members, there is mutual trust in contributing capital and doing business together. Besides, the small organizational structure will make the company’s operating model not too complicated.
Finally, hope this article is useful for you to answer the question about “Procedures for business suspension of single-member LLC in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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