During the Covid pandemic, businesses producing essential goods can still operate, while those doing business in non-essential industries can not operate according to Directive 16/CT-TTg. Facing losses, these businesses have to decide whether to suspend their business or dissolve. To have an insight into this problem, LSX legal firm provides you: “Should businesses suspend or dissolve in Vietnam?”
Legal grounds
- Law on Enterprise 2020
- Decree 78/2015/ND-CP
Business suspension or dissolution?
The Covid-19 epidemic makes it difficult for business activities. During this time, businesses will have to stop operating to solve financial and human resource difficulties as well as research the business market. , capital… Business owners who are still wondering whether to suspend their business or dissolve the company should choose the form of business suspension because:
Simple procedures
Enterprises, when wishing to suspend their business, only need to send a Notice of Suspension to the Business Registration Office where the head office located within 15 days before the suspension. The competent authority will process the application within 03 working days from the date of receiving the Notice.
As for the form of dissolution, enterprises need to carry out many procedures at many different competent agencies such as Tax Office, Customs Agency, and Business registration agency. Additionally, owners must carry out procedures related to employees and creditors. The time to carry out the dissolution of the enterprise takes much longer than the procedure for business suspension. In fact, it can take up to 1-2 months to complete the dissolution procedure.
Cheap expense
Because the procedure to suspend a business is simple, the cost to implement the suspension is also much less than that of the dissolution of the business. It should be noted that during the temporary suspension of business, the company must pay the full amount of tax owed as well as continue to pay the debts and complete the contracts signed with customers and employees (unless the parties have other agreements).
May return to operation after the suspension
During the temporary suspension of business, if the enterprise wants to resume business operations, it only needs to notify the business registration authority of the time limit for resumption of operation without any other procedures.
In case of dissolution of an enterprise, as a consequence-the termination of the existence of the enterprise make the one who wishes to continue doing business have to establish a new company. Accordingly, the new one can not use information and benefits from the old enterprise for business activities.
May transfer the business after the suspension
After the business suspension period; If the enterprise does not want to continue operating, it can transfer the company to recover part of its capital. Owners do not need to waste time and costs for dissolution; while still being able to take advantage of the company’s advantages to continue doing business.
Business suspension and dissolution?
Definitions
Business suspension
- “Suspending business” means the legal status of an enterprise in the process of temporarily suspending. The end of this period announced by the enterprise or the date the enterprise registers to resume business before the notified time limit.
- The enterprise that temporarily suspended to operate still have its legal status.
Business dissolution:
- Dissolution of an enterprise means the legal status of an enterprise having terminated all operations and having its business registration certificate revoked.
- As a result, the dissolved enterprise has its legal status and related obligations terminated.
Conditions
Business suspension:
- Enterprises must notify in writing the Business Registration Office no later than 03 working days before the date of suspension or resumption of business before the notice period.
Business dissolution:
- An enterprise may only be dissolved when it ensures payment of all debts and other property obligations and is not in the process of settling disputes at Court or Arbitration. Business owners and related people must be jointly responsible for the debts of the business.
Procedures
Business suspension
Step 1: At least 03 days before the date of business suspension, the enterprise shall submit a dossier of notice of business suspension to the business registration office where the enterprise’s head office is located.
Step 2: Within 03 days from the date of submission of the application, the business registration authority checks the validity of the application and issues a certificate of business suspension of the enterprise.
Implementation time: 03 working days from the date the enterprise submits the application for business suspension.
Business dissolution:
Firstly, terminate the branch, representative office, business location of the enterprise (if any)
Secondly, approving the decision to dissolve the enterprise
Thirdly, announce the dissolution of the enterprise
Then, liquidation of assets and payment of debts of the business.
Lastly, the business registration authority updates the status of the business after the payment obligation has been completed
Implementation time: At least 180 days from the date the decision on dissolution of the enterprise is sent
Legal consequences
- Terminate the operation of the enterprise for a certain period of time, upon the end of the suspension period, the enterprise will return to normal operation.
- Enterprises still have legal status.
- During the period of business suspension, the enterprise must fully pay the outstanding tax, social insurance, health insurance, and unemployment insurance amounts. Also, continue to pay debts, and complete the performance of contracts signed with customers and employees, unless otherwise agreed by enterprises, creditors, customers, and employees.
- Business dissolved.
- No longer have legal status.
- Termination of the tax code.
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.
Related articles
Procedures for temporary suspension of private enterprises in Vietnam
Term of business suspension of the enterprise in Vietnam
Procedures for business suspension for businesses facing difficulties due to Covid-19 in Vietnam
Related questions
According to regulations, before carrying out the dissolution of the company, the business owner must carry out procedures for terminating the operation of branches, representative offices, etc. of the enterprise. Therefore, the branch will no longer operate if the company proceeds to dissolve.
– Concealing or dispersing assets;
Waiver or reduction of debt collection rights;
Convert unsecured debts into secured debts with the assets of the enterprise;
– Sign a new contract, except for the case of enterprise dissolution;
Pledge, mortgage, gift or lease of property;
Termination of performance of an effective contract;
Mobilizing capital in any form.
Suspension means a temporary separation from work, while termination or discharge means permanent dismissal.
Contact LSX
Finally, hope this article is useful for you to answer the question about “Should businesses suspend or dissolve in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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