The process of dissolving a business in Vietnam is a complex process and needs to comply with legal regulations. If the business is experiencing difficulties in business and is no longer able to operate, dissolution may be the best option to legally terminate its operations
The process of dissolving a business in Vietnam is a complex process and needs to comply with legal regulations. If the business is experiencing difficulties in business and is no longer able to operate, dissolution may be the best option to legally terminate its operations. Here are the steps to take to dissolve a business.
Before dissolution, enterprises need to carry out the following procedures:
- Termination of operation of branches, representative offices, and business locations: According to Decree 01/2021/ND-CP, enterprises must terminate the operation of these units before submitting dissolution documents.
- Dissolution according to the Law on Enterprises 2020: According to Article 208, enterprises must take steps from passing a resolution on dissolution, liquidation of assets, to sending a notice of dissolution to the authorities.
Step 1: Hold a meeting to approve the dissolution decision
Enterprises need to hold a meeting and approve the dissolution decision. This decision must be adopted by:
- Owner of a one-member limited liability company.
- The Members' Council, for a limited liability company with two or more members.
- The General Meeting of Shareholders for joint-stock companies.
- General partners for partnerships.
The contents of the dissolution decision include:
- Name and address of the head office of the enterprise.
- Reason for dissolution.
- The time limit and procedures for liquidation of contracts and debt payment shall not exceed 6 months.
- Plan for handling obligations arising from labor contracts.
- Signature of the legal representative of the enterprise.
Step 2: Notification of dissolution decision Within 7 working days from the date of approval, the enterprise must:
- Send resolutions, dissolution decisions and meeting minutes to the Business Registration Office, tax authorities, and employees.
- Posting the dissolution decision on the National Business Registration Portal and publicly posting it at the head office, branch or representative office.
- If the enterprise still has financial obligations, it must enclose the debt settlement plan to creditors and related parties.
Step 3: Liquidate assets and pay debts
Enterprises organize asset liquidation and debt payment in order of priority:
1. Salary arrears, allowances, social insurance, health, unemployment, and other benefits of employees.
2. Tax debts.
3. Other debts.
After paying off all debts and dissolution costs, the rest will be divided among the owners in proportion to the capital contribution.
Step 4: Confirm customs duty obligations, import and export taxes
Enterprises send official letters to the General Department of Customs to confirm tax obligations, even if there are no import and export activities. The General Department of Customs will notify the status of the tax dossier within 10-15 days.
Step 5: Submit dossiers for tax identification number closure at tax authorities
Businesses need to:
- Send an official letter of application for tax identification number closure at the Sub-department of Taxation where the enterprise is located.
- Send an official letter requesting tax finalization and payment of tax debts (if any).
Step 6: Submit the dissolution dossier to the Business Registration Office
Within 5 working days from the date of full payment of debts, the enterprise shall submit a dissolution dossier, including:
- Notice of enterprise dissolution.
- Asset liquidation report, creditor list and paid debt amount.
Step 7: Update the activity status on the national portal
After receiving the dossier, the Business Registration Office will update the legal status of the enterprise on the National Enterprise Registration Database within 5 working days. If there is no objection, the Business Registration Office will issue a notice of dissolution.
If after 180 days from the receipt of the notice of dissolution without objection from the relevant parties, the business will be confirmed as dissolved.
According to Article 211 of the Law on Enterprises 2020, enterprises and managers are prohibited from carrying out the following activities:
- Concealing or dispersing property.
- Waiver or reduction of debt collection rights.
- Converting unsecured debts into secured debts.
- Sign a new contract (except for the enterprise dissolution contract).
- Pledge, mortgage, donation, lease of property. - Raising capital in any form.
Violations may be administratively sanctioned or examined for penal liability and must compensate for damage if they cause consequences.
If you need more information or support, please contact ADVN LAW for detailed advice.
- Address: F2&F3, No. 2 Phung Khac Khoan, Da Kao Ward, District 1, Ho Chi Minh City
- Phone: 0903.693.301 – 0909.393.329
- Email: vanphongluatsuadvn@gmail.com; advnlaw@gmail.com
