Business Dissolution in Vietnam

As mentioned in Business Suspension and Dissolution, enterprises shall be dissolved in the following cases:

  1. The operation period written in the company’s charter expires without a decision on extension;
  2. The dissolution is decided by the owner of the sole proprietorship, by all general partners of the partnership, by the Board of members or owner of limited liability company, or by the General Meeting of Shareholders of joint-stock company;
  3. The company fails to maintain the minimum number of members prescribed by this Law for 06 consecutive months without following procedures for business conversion;
  4. The Certificate of Business registration is revoked.

The dissolution in points 1, 2, and 3 above shall be carried out as follows:

a) Ratifying the decision on dissolution which must contain: (i) enterprise’s name and headquarter address; (ii) reasons for dissolution; (iii) procedures for finalizing contracts and settling debts of the enterprise. Deadline for settling debts and finalizing contracts must not exceed 06 months from the day on which the decision on dissolution is ratified; (iv) plans for settlement of obligations derived from employment contracts; (v) full name and signature of the enterprise’s legal representative.

b) Organizing enterprise’s asset liquidation.

c) Sending the decision on dissolution to the business registration authority, tax authority, and employees of the enterprise within 07 working days from the approval date; the decision on dissolution shall be posted on National Business Registration Portal, the enterprise’s headquarter, branches, and representative offices. If there are unsettled financial obligations, the decision on dissolution shall be enclosed with the debt settlement plan and sent to the creditors, people with relevant rights, obligations, and interests. The plan must contain the creditors’ names and addresses; the amount of debts, deadline, location, and method of payment; method and deadline for settlement of creditors’ complaints.

d) The business registration authority shall post a notification of the status of enterprises undergoing dissolution process on the National Business Registration Portal right after receiving the decision on dissolution from the enterprise. The notification must be posted together with the decision on dissolution and debt settlement plan (if any).

e) The enterprise’s debts shall be paid in the following order: 1. Unpaid salaries, severance pay, social insurance as prescribed by law, other benefits of employees according to collective bargaining agreement and signed employment contracts; 2. Tax debts; 3. Other debts.

After all debts and dissolution costs are paid, the remaining value shall be received by the sole proprietorship’s owner, members, shareholders, or owner of the company according to their holding of stakes or shares in the company.

f) The legal representative of the enterprise shall send the petition for dissolution to the business registration authority within 05 working days from the day on which all of the enterprise’s debts are settled.

g) The business registration authority shall update the enterprise’s legal status of National Enterprise Registration Database if no opinions or objections from relevant parties are received after 180 days from the day on which the decision on dissolution is receipt or within 05 working days from the receipt of the petition for dissolution.

The dissolution mentioned in point 4 shall be carried out following the procedures below:

a) The business registration authority shall post a notification of the status of the enterprise undergoing dissolution process on the National Business Registration Portal concurrently with issuing a decision to revoke the Certificate of Business registration or as soon as receiving an effective decision on dissolution issued by a Court. The notification shall be posted together with the Court’s decision to revoke the Certificate of Business registration.

b) Within 10 days from the receipt of the decision to revoke the Certificate of Business registration or from the effective date of the Court’s decision, the enterprise shall convene a meeting to decide the dissolution. The decision on dissolution and copy of the decision to revoke the Certificate of Business registration or the effective Court’s decision shall be sent to the business registration authority, tax authority, and employees of the enterprise, and be posted at the enterprise’s headquarter and branches. If required by law, the decision shall be posted on at least 03 consecutive issues of a conventional newspaper or online newspapers.

c) If there are unsettled financial obligations, the decision on dissolution shall be enclosed with the debt settlement plan and sent to the creditors, people with relevant rights, obligations, and interests. The plan must contain the creditors’ names and addresses; the amount of debts, deadline, location, and method of payment; method and deadline for settlement of creditors’ complaints.

d) The enterprise’s debts shall be paid in the order similar to the case above.

The enterprise shall also follow steps f and g in the case above.

It is quite a warning that the following activities are banned as of the issuance of decision on dissolution:

  1. Hiding, illegally liquidating assets;
  2. Renouncing or reducing the right to claim debts;
  3. Converting unsecured debts into debts secured on the enterprise’s assets;
  4. Signing new contracts, except for those serving the enterprise’s dissolution;
  5. Mortgaging, pledging, giving, leasing out assets;
  6. Terminating effective contracts;
  7. Raising capital in any shape or form.

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