ENTERPRISE DISSOLUTION (PART 1)

 The enterprise dissolution is the active closure of the enterprise or forced to close if in case of dissolution enterprises in accordance with the law. The dissolution of a business, especially is a large, relatively complex business that takes time and must comply with the order prescribed by law. In this article, LawPlus would like to introduce Valued Client’s regulations and procedures for enterprise dissolution. 

1. Cases of enterprise dissolution

According to the Enterprise Law 2020, Enterprise is .dissolved in the following cases:

• The term of operation stated in the company’s charter has expired without an extension decision;
• According to the decision of the business owner in the case of a private enterprise, .of all general partners, in the case of a partnership, of the Members’ Council, the company owner for limited liability companies of the General Meeting of.Shareholders with joint stock companies;
• The company no longer meets the minimum number of members as prescribed by law. This Law is for 6 consecutive months do not carry out procedures for business transformation;
• Business registration certificate revoked (see part 2).

2. Conditions for enterprise dissolution

Enterprises can only be .dissolved when all debts are guaranteed and other property obligations and the business is not in the process of Dispute resolution in court or arbitration. In case the Enterprise is. dissolved due to the withdrawal Certificate of business registration, the relevant Manager and enterprises are jointly responsible for corporate debts.

3. Order and procedures for enterprise dissolution

Except in case the Enterprise is dissolved due to the enterprise registration certificate being revoked the dissolution of the enterprise shall be carried out according to the order and procedures by the Law on Enterprises, specifically:

Step 1: Approving the decision to dissolve the enterprise

An enterprise dissolution decision must contain the following principal details:

• Name and address of the head office of the enterprise;
• Reasons for dissolution;
• Time limit and procedures for contract liquidation and payment of debts of the enterprise; time limit for debt payment, liquidation contract must not exceed 06 months from the date of passing the dissolution decision;
• Plan to handle obligations arising from the labor contract;
• Full name and signature of the legal representative of the enterprise.

Step 2: Organization of liquidation of corporate assets

The private business owner, Board of members, or the company owner, the Board of Directors directly organizes the liquidation enterprise’s assets, except for the company’s charter regulations on the establishment of a separate liquidation organization.

Step 3: Send dissolution decision and meeting minutes

Within 07 working days from the date of adoption, the dissolution decision and the minutes of the meeting must be sent to the Business Registration Authority, the Tax Authority, employees in the enterprise, post the dissolution decision on the National Portal on Business Registration and must be publicly posted at the head office, branch, office representative office of the enterprise.

In case the enterprise has unpaid financial obligations, the debt settlement plan must be enclosed with the decision on dissolution.to creditors, who have interests and related obligations. The notice must contain the name and address of the creditor; debt amount, term, location, and the method of payment of such debt; method and time limit for settlement of creditors’ complaints.

Note: Corporate debts are. paid in the following order:

• Debts of salary, severance allowance, social insurance as prescribed by .law, and other benefits of employees under the collective labor agreement and signed labor contracts;
• Tax debt;
• Other debts.
• After paying all debts and the cost of the dissolution of the business, the rest is .divided by the business owner private, members, shareholders, or the company owner in proportion to his/her ownership of contributed capital or shares.

Step 4: Update enterprise status

The Business Registration Authority must notify the Enterprise status is in the process of dissolution .on the National Portal business registration right after receiving decided to dissolve the enterprise. Accompanied by the right notice post the dissolution decision and debt settlement plan (if any).

Step 5: Procedures for the Tax Authority

Enterprise sends official letters to tax authorities to apply for tax finalization and tax identification number.

• Send a written request for dissolution to the Tax Department (with a notarized copy) Certificate of Enterprise Registration and The tax registration certificate)
• Application letter for tax finalization
• Pay taxes owed
• Pay fines (if any)

After having the confirmation of no tax debt from the Tax Department where the enterprise is located the Tax Department decided to close the corporate tax code.

Step 6: Apply for dissolution of the enterprise

Within 7 days from the date of payment in full debts of the enterprise, the legal representative of the Enterprises must send dissolution registration documents to the agency business registration of the province where the enterprise’s head office is located.

Components of the application for dissolution registration include:

• Notice of enterprise dissolution;
• Report on liquidation of corporate assets; list of creditors and the amount of debt paid, including the payment of all tax debts and owe money to pay social insurance premiums, employees after deciding to dissolve the enterprise (if any);
• Seal and seal sample certificate (if any);
• Business registration certificate.

Note:

1. For Enterprises with branches and business locations before carrying out the procedures .for registration of dissolution of enterprises have to carry out procedures to terminate the .operation of branches and offices representative, business location of the enterprise at the.Business Registration Office where branches, representative offices, and business locations are located.
2. The notice must be .accompanied by a decision of the company owner for a single-member limited liability company; Decision and a valid copy of the meeting minutes of the Members’ Council with a limited liability company with two or more members,.The General Meeting of Shareholders for joint-stock companies, .of the general partners for a partnership on the dissolution of the enterprise.
3. Businesses should only return the stamp to the police agency after the business registration authority has a notice requesting the enterprise to return the seal. If this is done before the agency Business registration notices, documents and forms then will not be fully stamped, will be difficult.in subsequent administrative proceedings.
4. For enterprises using the seal issued by the police agency, the enterprise.is responsible for returning the seal, the certificate of seal sample registration. to the police agency to be granted a certificate has revoked the seal. In this case, the seal and certificate of seal sample in the enterprise dissolution file be replaced with a certificate of seal withdrawal.

Step 7: Change the status of the dissolution

Within 05 working days from the date of receiving the dissolution dossier, the Registration Office Business changes the legal status of the business in the National database on business registration to the state of dissolution if not receive the tax authority’s refusal, at the same time Notice of dissolution of the enterprise.

Prohibited activities since the dissolution decision

Since the decision to dissolve the enterprise is .issued, it is strictly .forbidden for enterprises and persons. to Enterprise management performs the following activities:

• Concealing or dispersing property;
• Relinquish or reduce the right to collect a debt;
• Convert unsecured debts into debts secured by assets of the enterprise;
• Sign a new contract, except for the case of enterprise dissolution;
• Pledge, mortgage, donate or lease property;
• Terminate the performance of an effective contract;
• Mobilizing capital in any form.

Depending on the nature and seriousness of the violation, individuals may commit violations.  The above prohibitions can.be administratively .sanctioned or prosecuted criminal responsibility; If damage is caused, compensation must be made.

Conclude

Although it is stipulated in the Enterprise Law, dissolution procedures are pretty complicated in general because it has to go through many administrative agencies and perform various procedures, especially for large enterprises with many branches and business locations in different provinces. In addition, enterprises need to pay attention to the order of steps to deploy and notify officials; liability for contracts, transactions, and commitments for suppliers and partners; warranty liability for the goods; and dealing with industrial relations responsibilities to Avoid disputes that lead to The dissolution procedure is longer and more complicated.

Contents of advice and legal regulations are .referenced in the article.is at the time of consultation and may no longer be in effect at the time the reader reaches this article. Therefore, for detailed advice and implementation support, please contact LawPlus via email at info@lawplus.vn or phone number +84 2862 779399.