Dissolution of foreign capital company in Vietnam

For a foreign investor to completely terminate its legal rights and obligations, the investor must fully carry out the procedures to dissolve the enterprise according to the provisions of the Enterprise Law. These provisions are specified from Article 207 to Article 210 of the Enterprise Law 2020. We would like to summarize some steps to dissolve of foreign capital company in Vietnam as follows.

Legal basis

• Enterprise Law 2020;
• Decree 01/2021/ND-CP dated January 4, 2021;
• Circular 01/2021/TT-BKHĐT dated March 16, 2021.

Conditions for business dissolution

An enterprise shall only be dissolved when it ensures that all debts and other financial obligations are paid and is not in the process of resolving disputes at Court or Arbitration. The relevant manager and the enterprise whose Enterprise Registration Certificate is revoked shall be jointly responsible for the debts of the enterprise.

Procedures for dissolution of foreign capital company in Vietnam

Step 1: The enterprise passes a resolution and decides to dissolve the enterprise

Resolutions and decisions of enterprises must have the following main contents:

• Name and head office address of the enterprise;
• Reason for dissolution;
• Time limit, procedures for contract liquidation and payment of corporate debts;
• Plan for handling obligations arising from labor contracts;
• Full name and signature of private business owner, company owner, Chairman of the Board of Members, Chairman of the Board of Directors;

Step 2: Submit dissolution documents to competent state agencies

• Within 07 working days from the date of approval, the resolution, decision on dissolution, and meeting minutes must be sent to the Business Registration Authority, tax authority, and employees of the enterprise. The resolution and decision on dissolution must be posted on the National Business Registration Information Portal and publicly posted at the head office, branches, and representative offices of the enterprise.
• Update the status “In process of dissolution” on the national information portal on business registration.
• In case the enterprise still has outstanding financial obligations, it must send the resolution, dissolution decision, and debt settlement plan to the creditors, and persons with related rights, obligations, and interests. The debt settlement plan must include the name and address of the creditor; the amount of debt, the deadline, location, and method of payment of that debt; and the method and deadline for resolving creditors’ complaints.

Step 3: Liquidation of company assets

Private enterprises, the Board of Members or company owners, and the Board of Directors directly organize the liquidation of enterprise assets, except in cases where the Company Charter stipulates the establishment of a separate liquidation organization.

Step 4: Carry out procedures to close the Company’s tax code

• Depending on the actual accounting records of the enterprise, the tax code closure procedure will last from 06 months or more (not including procedures for penalties, violations, and late payment);
• During the process of tax settlement procedures, enterprises shall carry out procedures for reducing labor and resolving related regimes for employees within the time limit prescribed in the Labor Code.

Step 5: Purchase foreign currency, transfer the remaining capital of the investor (if any) abroad, return the company’s round stamp (if any)

In case the enterprise’s seal is issued by the police agency, the enterprise shall carry out the procedure to return the seal to the issuing agency.

Step 6: Return the enterprise registration certificate and terminate the project

The legal representative of the enterprise shall submit the enterprise dissolution dossier to the Business Registration Authority within 05 working days from the date of full payment of all debts of the enterprise.

Estimated time to dissolution of foreign capital company in Vietnam

After 180 days from the date of sending the dissolution decision to the Department of Planning and Investment, if there is no objection from the parties and the enterprise has completed the above steps, within 05 working days, the Business Registration Authority will update the legal status of the enterprise on the National Database on Business Registration.

Termination of investment project

Enterprises with foreign invested capital granted an Investment Registration Certificate or equivalent document, in addition to carrying out procedures for enterprise dissolution, the investor shall notify and return the Investment Registration Certificate to the Investment Registration Authority within 15 days from the date of termination of the investment project, together with a copy of the document recording the termination of the investment project. The Investment Registration Authority shall notify the relevant agencies of the termination of the investment project.

Some questions about the dissolution of the foreign capital companies in Vietnam

How long does it take for a business to be dissolved?

The law does not specifically stipulate how many years a business must operate before it can be dissolved. Businesses have the right to dissolve in the cases stipulated by the Enterprise Law.

Is it mandatory for a business with long-term losses to dissolve?

Enterprises are only dissolved in the following cases:

• The term of operation stated in the Company Charter ends without a decision to extend;
• According to the decision of the business owner for private enterprises, of all partners for partnerships, of the Board of Members, 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 completing procedures to convert the type of enterprise;
• The Enterprise Registration Certificate is revoked, except in cases where the Law on Tax Administration provides otherwise.

In what order of priority are business debts paid?

The company’s debts are given priority for payment as follows:

What documents need to be submitted when dissolving a business?

Business dissolution records include:

• Notice of business dissolution;
• Report on liquidation of enterprise assets; list of creditors and paid debts, including payment of all tax debts and debts of social insurance, health insurance, unemployment insurance for employees after the decision to dissolve the enterprise (if any);
• Notice from the Tax Authority on closing the tax code; (in case of not yet registered for tax, there must be a confirmation document from the Tax Authority).
• Certificate from the police agency on the return of the stamp
• Resolution, decision, and copy of meeting minutes of the Board of Members/General Meeting of Shareholders/Owner on the dissolution of the enterprise;
• Debt settlement plan (if any).

Consulting services on the dissolution of foreign capital company in Vietnam of Viet An Law

• Consulting on issues arising when dissolving a business: posting notices, closing accounts, settling taxes, confirming customs obligations, closing tax codes, returning stamps, sending notices requesting to delete the business name…
• Drafting business dissolution documents in accordance with customer requirements and relevant legal regulations;
• Proposal to terminate tax code and tax settlement to dissolve the enterprise;
• Return company stamp;
• Submit dissolution documents to update the legal status of dissolution of the enterprise in the National Database on Business Registration.

Please contact Viet An Law for the most effective advice!