In order for a foreign investor to completely terminate his/her legal rights and obligations, the investor must fully carry out the order and procedures to dissolve the company in accordance with the Law on Company. These regulations are specified from Articles 207 to 210 of the Company Law in 2020. We would like to summarize some steps to dissolve the business as follows:

Legal bases

• Law on Enterprise 2020;
• Decree 01/2021/ND-CP dated January 04^th 2021;
• Circular 01/2021/TT-BKHDT dated March 16^th

Cases and conditions for company dissolution in Vietnam

• Finish the operation term stated in the company’s charter without a decision on extension;
• According to the decision of the business owner for a private company, of all general partners for a partnership, of the Members’ Council, the company owner for a limited liability company, of the General Meeting of Shareholders for a joint-stock company;
• The company no longer meets the minimum number of members as prescribed by this Law within 06 consecutive months without carrying out procedures for changing the type of company;
• The Certificate of Business Registration shall be revoked, unless otherwise provided for by the Law on Tax Administration.

The company is only dissolved when it ensures payment of all debts and other property obligations and not in the process of settling disputes at Court or Arbitration. The relevant manager and the company whose Certificate of Business Registration is revoked are jointly responsible for the debts of the company.

Order and procedures for dissolution of foreign company in Vietnam

Step 1: The company adopts the resolution and decision to dissolve the company

Resolutions and decisions of company must contain the following principal contents:

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

Step 2: Send the dissolution dossier to the competent state agencies

• Within 07 working days from the date of adoption, the resolution, dissolution decision and meeting minutes must be sent to the business registration agency, tax authority, employees in the company. Resolutions and decisions on dissolution must be posted on the National Business Registration Portal and publicly posted at the head office, branches and representative offices of the company.
• In case an company still has unpaid financial obligations, it must enclose the resolution, dissolution decision and debt settlement plan to creditors, persons with relevant rights, obligations and interests. The debt settlement plan must contain the name and address of the creditor; amount of debt, duration, place and method of payment of such debt; how and within the time limit for settling creditors’ claims.

Step 3: Liquidate company assets

Private company, the Members’ Council or the company owner, the Board of Directors directly organize the liquidation of company assets, unless the company’s charter provides for 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 company, the tax code closure procedure will last from 06 months or more (excluding procedures for penalties, violations, late payment arising);
• In the process of carrying out tax finalization procedures, company shall carry out procedures for reducing labor and settling relevant regimes for employees within the time limit specified in the Labor Code.

Step 5: Pay the stamp (round carpentry) of the company

In case the company’s seal is issued by a police agency, the company shall carry out procedures for returning the seal at the granted agency.

Step 6: Return the business registration certificate, terminate project operation

The legal representative of the company shall send the company dissolution dossier to the Business Registration Office within 05 working days from the date of payment of all debts of the company.

Estimated time for dissolution of the 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 of the parties and the company has completed the above steps, within 05 working days, the Business Registration Agency shall update the legal status of the company on the National Business Registration Database.

Termination of investment projects in Vietnam

A foreign capital company shall be granted an Investment Registration Certificate or equivalent document, in addition to carrying out procedures for company dissolution, the investor shall notify and return the Investment Registration Certificate to the Investment Registration Agency within 15 days from the date of termination of operation of the enclosed investment project according to a copy of the document recording the termination of operation of the investment project. The investment registration agency shall notify the termination of operation of the investment project to relevant agencies.

Some questions about the dissolution of foreign capital company in Vietnam

How long does it take for an company to be established to have the right to dissolve?

The law does not specify how many years an company must operate to be dissolved. Company have the right to dissolve according to the cases prescribed by the Company Law.

Is a business with prolonged losses required to be dissolved?

The company is dissolved only in the following cases:

• End the operation term stated in the company’s charter without a decision on extension;
• According to the decision of the business owner for a private company, of all general partners for a partnership, of the Members’ Council, the company owner for a limited liability company, of the General Meeting of Shareholders for a joint-stock company;
• The company no longer meets the minimum number of members as prescribed by this Law within 06 consecutive months without carrying out procedures for changing the type of company;
• The Certificate of Business Registration shall be revoked, unless otherwise provided for by the Law on Tax Administration.

In what order of priority are the debts of the business paid?

The debts of the company are prioritized for payment as follows:

• Arrears of salary, severance allowance, social insurance, health insurance, unemployment insurance as prescribed by law and other benefits of employees under collective labor agreements and signed labor contracts;
• Tax liabilities;
• Other debts;

After paying the cost of dissolution of the company and debts, the remainder shall be divided among the owner of the private company, members, shareholders or company owners according to the proportion of ownership of contributed capital and shares;

What documents need to be submitted when carrying out procedures for business dissolution?

An company dissolution dossier includes:

• Notice of company dissolution;
• Report on liquidation of company assets; list of creditors and paid debts, including payment of all tax debts and debts for social insurance, health insurance, unemployment insurance contributions for employees after deciding to dissolve the company (if any);
• Notification of the Tax Authority on the payment of the tax code; (in case you have not registered for tax, you must have a written confirmation from the Tax Office).
• Certificate from the police agency of having paid the stamp
• Resolutions and decisions and copies of meeting minutes of the Members’ Council/General Household of Shareholders/Owners on the dissolution of the company;
• Debt settlement plan (if any).

What are the steps to carry out procedures for dissolution of the company?

There are 6 steps to proceed with the procedure for dissolution of an company:

Step 1: Approve the decision to dissolve the company.

Step 2: Publicly announce the dissolution decision on the National Business Registration Portal.

Step 3: Liquidate assets and pay the company’s debts.

Step 4: Invalidation of the tax code; Tax finalization and settlement of regimes for employees;

Step 5: Pay the stamp (if any)

Step 6: Submit the dissolution dossier to update the legal status of dissolution of the company in the National Business Registration Database

Consulting services on dissolution of foreign capital company under Viet An Law Firm

• Advising on issues arising when dissolving an company: posting statements, closing accounts, tax finalization, confirming customs obligations, paying tax codes, paying back stamps, sending notices to delete business names…
• Drafting dossiers of company dissolution in accordance with customer requirements and relevant laws;
• Proposing to terminate the tax code and tax finalization to dissolve the company;
• Paying back company stamps;
• Submitting for dissolution to update the legal status of dissolution of the company in the National Business Registration Database.