Content Summary
In recent years, Vietnam has become an attractive destination to attract investors. However, due to the impact of the Covid pandemic on the global economy, investors faced many difficulties in implementing investment project goals, leading to the inefficient operation of FDI enterprises. Facing that situation, terminating investment projects and dissolving the enterprise is the most inevitable and optimal choice. The dissolution of enterprises, especially foreign-invested enterprises, is very complicated. Therefore, to help customers better understand this issue, please read the following article.
CASES AND CONDITIONS FOR DISSOLUTION OF ENTERPRISES
An enterprise is dissolved in the following cases:
- The operation term stated in the company’s charter expires without a decision on extension;
- According to resolutions and decisions of the business owner for private enterprises, of the Members’ Council for partnerships, of the Members’ Council, of the company owner for limited liability companies, of the General Meeting of Shareholders for joint-stock companies;
- The company no longer has the minimum number of members as prescribed by this Law for 06 consecutive months without carrying out procedures for transformation of enterprise type;
- The certificate of enterprise registration is revoked unless otherwise provided by the Law on Tax Administration.
– An enterprise may only be dissolved when it ensures payment of all debts and other property obligations and is not in the process of settling disputes at Court or Arbitration. The relevant manager and the enterprise specified at point d) above are jointly responsible for the debts of the enterprise.
ORDER, PROCEDURES FOR DISSOLVING ENTERPRISES
Step 1: Terminate the operation of the investment project
- An FDI owning an Investment Registration Certificate must, in addition to carrying out the procedures for dissolution of the enterprise, also notify the termination of operation of the investment project to the investment registration authority.
- Within 15 days from the decision to terminate the operation of the investment project, the investor shall send the decision together with the Investment Registration Certificate to the competent investment registration agency.
Step 2: The enterprise passes a resolution and a decision to dissolve the enterprise
- A decision on dissolution of a foreign-invested company must include the following principal details:
- Name and address of the head office of the enterprise;
- Reason for dissolution;
- Time limit and procedures for contract liquidation and payment of debts of the enterprise;
- The plan to handle obligations arising from the labor contract;
- Full name and signature of the company owner, Chairman of the Members’ Council, Chairman of the Board of Directors.
Step 3: The Members’ Council or the company’s owner, the Board of Directors shall directly organize the liquidation of the enterprise’s assets unless the company’s charter provides for the establishment of a separate liquidation organization;
Step 4: The resolution, the decision on dissolution, and meeting minutes must be sent to the business registration agency, tax agency, and employees in the enterprise within 07 working days from the adoption. Resolutions and decisions on dissolution must be posted on the National Enterprise Registration Portal and publicly listed at the enterprise’s head office, branches, and representative offices. The business registration authority must notify the status of the enterprise on the National Enterprise Registration Portal after receiving the resolution or decision on the dissolution of the enterprise.
Step 5: Pay the debts of the enterprise in the following order of priority:
- Salary arrears, severance allowance, social insurance, health insurance, unemployment insurance as prescribed by law and other benefits of employees under the collective labor agreement and labor contract signed act;
- Tax debt;
- Other debts;
After the dissolution costs and debts have been paid, the remainder shall be divided among members, shareholders, or company owners in proportion to their ownership of contributed capital or shares.
Step 6: The legal representative of the enterprise shall send the enterprise dissolution dossier to the business registration agency within 05 working days from the date of payment of all debts of the enterprise.
FOREIGN INVESTMENT CORPORATION DOCUMENTS
An enterprise dissolution dossier includes the following documents:
- Notice of enterprise dissolution;
- Report on liquidation of corporate assets; the list of creditors and the amount of debt paid, including payment of all tax debts and social insurance, health insurance, and unemployment insurance premiums for employees after the decision to dissolve the business occupation (if any).
NOTES
- In case the enterprise uses the seal issued by the police agency, the enterprise shall return the seal and certificate of seal sample registration to the police office for a certificate of seal withdrawal.
- Enterprises check and close foreign direct investment capital accounts during the process of enterprise’ dissolution
- Investors liquidate the investment project by themselves according to the provisions of the law on asset liquidation when the investment project terminates its operation.
- The handling of land use rights and land-attached assets upon termination of operation of an investment project shall comply with the provisions of the land law and other relevant laws.
Procedures for the dissolution of foreign-invested enterprises are complicated, time-consuming, and labor-intensive. Therefore, if you have questions about this procedure or need legal assistance, please don’t hesitate to contact AZLAW:
AZLAW LAWFIRM & ACCOUNTING
K28, Alley 68 Trung Kinh, Yen Hoa, Cau Giay, Hanoi
Tel: 0987.748.111
Email: info@azlaw.com.vn
Website: https://azlaw.com.vn/
