Procedures for separation of a limited company with 100% foreign capital

Procedures for separation of a limited company with 100% foreign capital. Procedures for adjusting investment projects in case of project division, separation, or merger. Let us learn about this topic with LSX Law firm below:

Legal grounds

Enterprise Law 2020

Decree 31/2021/ND-CP

Procedures for separation of a limited company with 100% foreign capital

The procedures for separating a limited company will comply with the provisions of Article 199 of the Enterprise Law 2020 as follows:

Article 199. Separation of companies

Specifically, a limited company or a joint-stock company; may be separated by transferring part of the assets, rights, obligations, members; and shareholders of the existing company (in the future referred to as the separated company); to establish one or several new limited companies or joint-stock companies (in the future referred to as the separated company) without terminating the existence of the separated company.

In addition, the separated company must register to change the charter capital; the number of members and shareholders corresponding to the contributed capital, shares; and the decrease in the number of members and shareholders (if any); concurrently register the business for the separated companies. 

Procedures for separating a limited company from a joint-stock company with 100% foreign capital are as follows:

Procedures for separation of a limited company with 100% foreign capital

Firstly, the Members’ Council, the company owner; or the General Meeting of Shareholders of the separated company passes a resolution or Decision on separation of the company; under this Law and the company’s Charter.

A resolution or Decision on separation of the company must include the following principal contents:

• Name and address of the head office of the separated company; the name of the separated company established;
• Plan on using labor; how to separate the company; the value of assets, rights, and obligations transferred from the separated company to the separated company;
• The time limit for separation of companies.

Resolutions and decisions on separation of the company must be sent to all creditors and notified to employees within 15 days; from the date of issuance of the Decision or adoption of the resolution;

Secondly, the members, company owners; or shareholders of the separated company adopt the Charter, elect or appoint the Chairman of the Members’ Council, the President of the company; the Board of Directors, the Director or the General Director. and conduct enterprise registration under this Law.

As a result, after business registration; the separated company; and the separated company must be jointly responsible for the obligations, unpaid debts; labor contracts, and other property obligations of the company. The separated company, except in the case of the separated company; the separated company, the creditors, customers, and employees have other agreements.

Besides, the separated companies automatically inherit all legal rights; obligations, and interests divided according to the resolution and Decision on separation of the company. 

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Order and procedures for adjustment of investment projects when there is a change due to the reason of division, separation, merger, or consolidation of economic organizations with 100% foreign capital

In addition, your case is a limited company with 100% foreign capital; so you will still have to comply with the regulations on the order; and procedures for adjusting investment projects when there is a change due to reasons such as division, separation, merger; consolidation of economic organizations according to the provisions of Decree 31/2021/ND-CP as follows:

Article 50. Adjustment of investment projects in case of division, separation, or merger of investment projects

Investors have the right to adjust investment projects in the following forms:

Firstly, divide and split the ongoing investment project of that investor (in the future referred to as the divided or split project) into two or several projects;

Secondly, merging one or several investment projects of such investor (in the future referred to as the merged project) into an investment project of such investor (in the future referred to as the merged project).

 The division, separation, or merger of an investment project in the form specified in Clause 1 of this Article; must satisfy the following conditions:

First, the land use conditions as prescribed by the land law; business investment conditions (if any), and other conditions as prescribed by law;

Secondly, the investor’s conditions (if any) must not be changable in the Decision approving the investment policy or the Certificate of investment registration before the division, separation, or merger of the investment project; 

Procedures for adjusting investment projects in case of project division, separation, or merger with 100% foreign capital shall comply with the following provisions:

Procedures for separation of a limited company with 100% foreign capital

Case 1:

For an investment project that has already been approved; the investor shall submit 08 sets of dossiers to the Ministry of Planning and Investment or 04 sets to the Investment Registration Authority; corresponding to the authority to approve the project investment policy.

Profile includes:

• A written request for adjustment of the investment project;
• Report on the implementation of the investment project up to the time of division, separation, or merger of the investment project also;
• Investor’s Decision on division, separation, a merger of an investment project or other document of equivalent legal validity;
• Documentation of investor’s legal status also;
• Copy of Investment Registration Certificate or Decision on approval of investment policy (if any);
• Copy of Investor Approval Decision (if any) also;
• To explain or provide documents related to the adjustment of the contents specified at Points b, c, d, dd, e, g and h, Clause 1, Article 33 of the Law on Investment (if any); 

Besides, the agency specified at Point a of this Clause considers the conditions for division; separation, and merger of an investment project specified in Clause 2 of this Article; to carry out the procedures for adjusting the investment project according to the corresponding provisions in Clause 2 of this Article. Articles 44, 45, and 46 of this Decree. The Decision approving the adjustment of investment policy shall be sent to the Investment Registration Authority and the investor;

Case 2:

Procedures for separation of a limited company with 100% foreign capital

Specifically, for an investment project that has been granted an investment registration certificate ;and is not subject to the approval of investment policies; or approved for investment policies; but not in the cases specified in Clause 3, Article 41 of the Law For investment; the investor shall submit 01 sets of documents specified at Point a of this Clause to the Investment Registration Authority. The investment registration authority shall consider the conditions for division; separation, and merger of investment projects specified in Clause 2 of this Article; to carry out the procedures for adjusting investment projects according to Article 47 of this Decree. The adjusted investment registration certificate is sent to the investor. 

Finally, hope this article about procedures for separation of a limited company with 100% foreign capital is helpful for you!

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