Things you need to know when suspending a business

by DangKhoi

Sometimes, enterprises will have hard times facing inefficient business situations; Therefore, they have to pause the operation of the business to figure things out or have a new business plan. So, to suspend a business, do owners need to learn about the legal provisions on business suspension? What are the procedures for the temporary suspension of a business? What are the things you need to know about when suspending a business? Let’s find out in this article with LSX Law firm.

Legal Ground

  • the Enterprise Law 2020;
  • Decree 01/2021/ND-CP;

What is business suspension?

According to K1 Article 41 of Decree 01/2021/ND-CP, the provisions on business suspension are as follows:

Article 41. Legal status of enterprises

Legal status of enterprises in the National Database of Registration Business registration includes:

1. “Suspended business” means the legal status of an enterprise during the period of business suspension as prescribed in Clause 1, Article 206 of the Law on Enterprises. The date of changing the legal status of “Suspended business” is the date the enterprise registers to start suspending its business. The end date of the legal status of “Suspended business” is the end date of the business suspension period announced by the enterprise or the date the enterprise registers to resume business before the notified time limit.

Accordingly, enterprises have the right to make their own decisions on business suspension but must follow procedures and submit documents in accordance with regulations at least 15 days before the date of suspension or resumption of business. During the business suspension, the enterprise still has to pay the full amount of tax owed. Continue paying the debts and complete the implementation of contracts signed with customers and employees. 

Dossiers for business suspension for each type of business

Please know, before suspending a business, enterprises should prepare dossiers suspended matching the type of your business based on the laws. Because the characteristics of each type of business are different. And, the way of presentation must also comply with legal regulations; this is quite a difficult stage that takes a lot of time for people to prepare the documents. Therefore, we will detail the business suspension records for each type of business for your convenience.

Dossier for business suspension of One member limited company

  • 01 notice of business suspension;
  • 1 decision and a copy of the meeting minutes of the company owner;
  • 1 power of attorney (if the applicant is not the owner of the company or a legal  representative of the company.)

Dossier for business suspension of trading limited company with two members or more

  • 01 notice of business suspension;
  • 1 decisions and copies of minutes of meetings of the Board members;
  • 1 a power of attorney (if the applicant is not the owner of the company or a legal  representative of the company.)

Dossier for business suspension of Joint stock company

  • 01 notice of business suspension;
  • 1 decision and copy of meeting minutes of the Board of Directors;
  • 1 power of attorney (if the applicant is not the owner of the company or a legal  representative of the company.)

Dossier for business suspension of Partnership company

  • 01 notice of business suspension;
  • 1 decision and copy of the meeting minutes of the Board of Directors
  • 1 power of attorney (if the applicant is not the owner of the company or a legal  representative of the company.)

Dossier for business suspension of  private enterprises

  • 01 notice of business suspension;
  • 1 decision of the business owner;
  • 01 power of attorney (if the applicant is not the business owner)

Steps you need to know when suspending a business

Step 1: Prepare and submit documents

Individuals and organizations must prepare the above documents. Then, submit online to the Department of Planning and Investment of the province/city where the enterprise’s head office is registered.

Step 2: Process the application for business suspension.

  • The business registration office accepts the application and inquires feedback from relevant agencies (if necessary) during the process;
  • Complete the results of the application and update it on the online database so that the enterprise can stay updated on the status of the application.

Step 3: Return the result of the application

  • When the online application process is valid. The enterprise will submit an application to the Business Registration Office to receive the results;
  • In case the dossier needs to be amended or supplemented; the enterprise will amend and supplement the dossier at the request of the registrar.

Steps you need to know when suspending a business

Step 1: Prepare and submit documents

Individuals and organizations must prepare the above documents. Then, submit online to the Department of Planning and Investment of the province/city where the enterprise’s head office is registered.

Step 2: Process the application for business suspension.

  • The business registration office accepts the application and inquires feedback from relevant agencies (if necessary) during the process;
  • Complete the results of the application and update it on the online database so that the enterprise can stay updated on the status of the application.

Step 3: Return the result of the application

  • When the online application process is valid. The enterprise will submit an application to the Business Registration Office to receive the results;
  • In case the dossier needs to be amended or supplemented; the enterprise will amend and supplement the dossier at the request of the registrar.

Which agency you need to know when suspending a business

Once again, we reiterate, the competent authority to decide to suspend the business of an enterprise is the Department of Planning and Investment, specifically the Business Registration Office under the Department of Planning and Investment.

We also covered online filing. This is not a new rule, but many old businesses do not know this about business suspension. Currently, before submitting the hard copy application at the Department of Planning and Investment. Individuals and organizations will have to scan documents and send them online at the national enterprise registration through the website: https://dangkykinhdoanh.gov.vn/.

When an enterprise suspends business of its branch, representative office, or business location, it should be noted. The place where the business suspension application is filed in the place where the business suspension unit is established. It does not depend on the head office of the company.

For example, Joint Stock Company A has its head office in Hanoi and establishes a branch in Da Nang. The company wants the branch in Da Nang to suspend business for 1 year; the company must submit the application to the business registration office under the Department of Planning and Investment of Da Nang city.

Time limit and duration in business suspension

Time limit for enterprises to suspend business Business

Suspension is understood as stopping business and production for a certain period of time. The suspension period is governed by specific laws and regulations.

The duration of business suspension must not exceed one year. After the notice period expires, if the enterprise, branch, representative office or business location continues to suspend business, they must give further notice to the business registration office. The total period of continuous business suspension must not exceed two years.”

Thus, the total period of continuous business suspension of an enterprise; branch, representative office, business location is not more than 02 years. Each suspension must not exceed 01 year.

Time limit for notification of business suspension to the competent authority

According to the provisions of the Law on Enterprises, The enterprise must notify the business suspension at least 15 days before the business suspension.

Time limit for processing business suspension dossiers

After submitting valid business suspension dossiers. The enterprise will have to wait 3 working days to receive the Certificate of the enterprise or branch; business locations, representative offices have registered to suspend business according to regulations.

Within 03  days working from reception of the valid dossiers, the Business Registration agency will issue a Business suspension Certificate of Business, Branch; Representative offices, registered business locations.

Hope this article informed you on things you need to know when suspending a business. If you need any further information, please contact LSX Law Firm0833102102

Frequently Asked Questions

Do I have to pay social insurance if I suspend my business?

So you know, If the company has no other agreement with the employee, the company still has to pay full social insurance according to the provisions of law during the period of business suspension.

What are the Penalties for suspending business without notice?

You must know that A fine ranging from VND 1,000,000 to VND 2,000,000 shall be imposed for one of the following acts: failing to notify or notifying the business registration office on time of the time and duration of business suspension, or continue in business.

Can a company that owes tax be able to suspend its business?

That is fine. But during the temporary suspension of business, the company must ensure to fully pay the outstanding tax amount into the state budget within the prescribed time limit. If there is a late payment of tax, the tax authority will calculate a fine for late payment of tax according to regulations.

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