Enterprise Dissolution: A Comprehensive Guide in Vietnam

Businesses, like living organisms, experience growth and sometimes reach a point where dissolution becomes the most viable path. In Vietnam, the process of enterprise dissolution, though complex, offers a structured framework to wind down operations and ensure a legal and orderly exit. This guide delves into the various aspects of enterprise dissolution, providing a roadmap for businesses contemplating this crucial decision. Reading this article from NT International Law Firm will help you make more informed decision.

Enterprise Dissolution: A Comprehensive Guide in Vietnam

Cases for Enterprise Dissolution: Voluntary and Involuntary

Two primary scenarios trigger enterprise dissolution in Vietnam:

1. Voluntary Dissolution:

• Private Enterprises: Decision by the owner.
• Partnership Companies: Consent of all general partners.
• Limited Liability Companies (LLCs): Board of members and company owners’ approval.
• Joint Stock Companies (JSCs): Resolution by the General Meeting of Shareholders.

2. Involuntary Dissolution:

• Capital Transfer: When members transfer their capital contributions or shares, causing the company to fall below the minimum number of members for 6 months without undergoing conversion procedures.
• Insolvency: When the enterprise can no longer pay its debts and needs to declare bankruptcy as per the 2014 Bankruptcy Law.

Legal Basis for Dissolution:

The 2020 Enterprise Law forms the bedrock for enterprise dissolution, outlining the procedures and conditions. Additionally, relevant decrees and circulars issued by the Ministry of Planning and Investment provide specific details and clarifications.

Conditions for Dissolution:

Before embarking on dissolution, enterprises must adhere to several key conditions:

• Debt Payment: All outstanding debts, including employee salaries, taxes, social insurance contributions, and business partner dues, must be settled in full.
• Dispute Resolution: The enterprise must not be embroiled in ongoing legal disputes at courts or commercial arbitration.
• Solvency: In case of insolvency, bankruptcy procedures take precedence over dissolution.

Dissolution Procedures: Step-by-Step

Dissolving an enterprise involves a well-defined sequence of steps:

1. Decision Approval:

• The authorized body, as specified in the case type (e.g., owner for private enterprises, General Meeting for JSCs), approves the dissolution decision.
• The decision document details the reasons for dissolution, debt settlement plans, timeframes, labor obligation handling, and legal representative signatures.

2. Asset Liquidation:

• The authorized body, or a designated liquidation organization, systematically liquidates the enterprise’s assets.

3. Notification and Publication:

• Within 7 working days, the dissolution decision and meeting minutes are sent to the business registration agency, tax authorities, employees, and publicly posted on relevant portals and company premises.

4. Debt Settlement:

• Debts are prioritized and paid off in accordance with legal regulations.
• Remaining assets, after debt settlement and dissolution costs, are distributed among owners or shareholders based on their ownership ratios.

5. Dissolution Request:

• Within 5 working days of settling all debts, the legal representative submits a dissolution request to the business registration agency.

6. Post-Dissolution Actions:

• The business registration agency updates the enterprise’s status in the National Business Registration Database after 180 days or upon receiving all required documents.
• Additional steps may involve tax code closure, customs clearance confirmation, bank account closure, and return of legal documents and seals.

Documentation for Dissolution:

To ensure a smooth process, prepare the following documents:

• Notice of tax code closure.
• Enterprise dissolution announcement.
• Customs clearance completion confirmation.
• Bank account closure confirmation or commitment to avoid opening new accounts.
• Original business registration and seal sample certificate.
• Legal entity stamp.
• Dissolution dossier prepared and signed by the company.

Seeking Professional Guidance:

Navigating enterprise dissolution can be complex and involve legal and financial intricacies. Consulting with experienced legal and financial professionals can minimize risks, ensure compliance with regulations, and maximize the efficiency of the process.

Conclusion:

Enterprise dissolution, though a significant decision, can be managed effectively with meticulous planning and adherence to the legal framework. By following the outlined procedures, consulting with professionals, and ensuring proper documentation, businesses can navigate this process with clarity and confidence, paving the way for a smooth and compliant exit.

NT International Law Firm is Here to Help

NT International Law Firm has addressed the question of how and when you must make a difficult decision such as dissolving your company. If you have any further questions or concerns regarding corporate law, please contact our law firm immediately for expert legal advice.

If you require any legal assistance, please feel free to reach out to us via phone at 090 252 4567 or through email: info@ntpartnerlawfirm.com. At NT INTERNATIONAL LAW FIRM, our team is committed to offering you prompt and personalized advice.

You also might be interested in:

• The 2015 Civil Code in English
• The 2020 Law On Enterprises in English