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Establish a company in Vietnam based on full division

A company division is a method of corporate restructuring whereby a parent company is divided into two or more subsidiaries. Division of a company is commonly used when a business expands its business activities or focuses on core business areas while improving management efficiency or resolving conflicts among members. In this article, Viet An Law will present in detail procedures to establish a company in Vietnam based on full division, to help businesses do conveniently and effectively.

Set up a Company

Legal basis

  • Law on Enterprise 2020;
  • Decree 01/2021/ND-CP on business registration.

What is the full division of a company?

  • A divided company will terminate its existence after dividing the assets, rights and obligations, members, and shareholders of the existing company (hereinafter referred to as the divided company) to establish two or more new companies.
  • The division of a company is carried out on the legal basis of a resolution or decision to divide the divided company.
  • In addition to automatically inheriting all legal rights, liabilities, and interests of the divided company, new companies must be jointly responsible for liabilities, unpaid debts, labor contracts, and other property obligations of the previous company.

Division company procedures within an enterprise

According to the provisions of Article 198 of the Enterprise Law 2020, procedures for dividing limited liability companies and joint stock companies within enterprises are carried out as follows:

  • Step 1: The Board of members, the company owner, or the General Meeting of Shareholders of the divided company passes a resolution and decision to divide the company according to the provisions of the Enterprise Law 2020 and the Company’s Charter. Resolutions and decisions to divide the company must be sent to all creditors and notified to employees within 15 days from the date of decision or adoption;
  • Step 2: Members, company owners, or shareholders of the newly established company approve the Charter, elect or appoint Chairman of the Board of Members, Company President, Board of Directors, Director or General Director, and conduct new business registration.

Competent authority records company division procedures

To record the new legal status of the divided company and the newly established company after the division, the enterprise law stipulates:

  • The business registration office where the divided company is headquartered updates the legal status of the divided company in the National Business Registration Database when issuing Enterprise Registration Certificates to new companies.
  • In case the new company has a headquarters address outside the province with the divided company, the business registration agency where the new company’s headquarters is located must notify the new business registration to Authority where the divided company headquarters is located to update the legal status of the divided company on the National Business Registration Database.

Application to establish a company in Vietnam based on full division

No File name Note
1 Business registration documents for limited liability companies and joint stock companies of new companies (Article 23, Article 24 of Decree 01/2021/ND-CP). 01 original copy
2 Application for business registration 01 original copy

Appendix I-2, I-3, I-4 Decree 01/2021/ND-CP

3 Company charter 01 original copy
4 Legal documents of the individual for the legal representative of the enterprise 01 Copy
5 Personal legal documents for company owners who are individuals; Legal documents of the organization for the company owner being an organization (except in cases where the company owner is the State); Legal documents of the individual for the authorized representative and document appointing the authorized representative. For company owners who are foreign organizations, copies of the organization’s legal documents must be consular legalized. 01 Copy

Appendix I-10 Decree 01/2021/ND-CP

6 Investment registration certificate in case the enterprise is established by a foreign investor or an economic organization with foreign investment capital according to the provisions of the Investment Law and its guiding documents. 01 Copy
7 List of members for multiple-member LLCs 01 original copy

Appendix I-6 Decree 01/2021/ND-CP

8 List of founding shareholders and list of shareholders who are foreign investors for establishing joint stock companies 01 original copy

Appendix I-7, I-8 Decree 01/2021/ND-CP

9 Resolution and decision on company division, including the following main contents: name and head office address of the divided company, names of companies to be established; principles, methods, and procedures for dividing company assets; labor use plan; method of division, time limit and procedures for converting capital contributions, shares and bonds of the divided company to newly established companies; principles for resolving the divided company’s obligations; Time limit for the procedure of dividing the company. 01 original copy
10 Minutes of meetings of the Board of Members for multiple-member limited liability companies, of the General Meeting of Shareholders for joint stock companies on the company division. 01 Copy
11 Power of Attorney for Viet An Law to carry out the procedure 01 original copy
12 Legal documents of authorized individuals 01 Copy

Procedures to establish a company in Vietnam based on full division

  • Step 1: The person applying for the authorization of the divided company can choose to apply directly or by mail to the one-stop department of the Business Registration Office – Department of Planning and Investment. In the case of an online application, the applicant uses the business registration account to declare information, download electronic documents authenticate the business registration application via an electronic information network, and pay fees and chargers according to the process on the national business registration portal (https://dangkylanhdoanh.gov.vn ).
  • Step 2: After completing the registration application, the applicant will receive a receipt of the business registration application sent directly or via the electronic information network in the form of online registration.
  • Step 3: The Business Registration Office issues business registration to the business in case the application is eligible and notifies the business about the issuance of business registration. In case the dossier does not meet the conditions, the Business Registration Office will send a notice via electronic information network to the enterprise to request amendments and supplements to the dossier.
  • Step 4: Publish the business registration information of newly established businesses. The request for publication of business registration contents is made by the divided company at the time of submitting the new business registration application.
  • Step 5: The Business Registration Office where the divided company’s headquarters is located sends information to the Tax Authority. In case the company is divided and the new company is headquartered in a different province, the Business Registration Offices will send information to each other. The tax authority is responsible for sending information to the Business Registration Office about the enterprise’s completion of settlement and transfer of tax obligations.
  • Step 6: Within 01 day from the date of receiving information from the Tax Authority about the divided company completing settlement and transferring tax obligations, the Business Registration Office updates the legal status of the divided company. division based on the business registration information of the divided company, and at the same time terminate the existence of branches, representative offices, and business locations of the divided company.

Distinguish between full division and partial division of a company in Vietnam

Both are forms of restructuring by dividing to inherit corporate rights and obligations, but full division and partial division of companies in Vietnamese law has certain differences, specifically:

Criteria Full division Partial division
Legal basis Article 198 of the Enterprise Law 2020. Article 199 of the Enterprise Law 2020.
Form A = B + C

In which: A is the divided company; B, C are new companies.

A = A + B

In which: A is the divided company; B is the newly divided company.

Legal consequences The divided company terminates its operations to establish two or more new companies. The divided company did not terminate its operations but adjusted its business registration to operate concurrently with the new company.
Division of rights and obligations Divide the assets, rights and obligations, members, and shareholders of an existing company to establish two or more new companies. Transfer part of the assets, rights, obligations, members, and shareholders of an existing company to establish two or more new companies
Implementation procedures Business registration of new companies.

Record the legal status of the division and termination of the divided company’s operations.

Business registration of new companies.

Adjusting the business registration of the divided company.

Company establishment services of Viet An Law based on full division

  • Consulting on drafting documents to establish a business based on division or separation of the company;
  • Representing customers to carry out registration procedures with competent authorities;
  • Monitor and process notifications from the business registration agency during the application processing process;
  • Receive results and hand over to customers;
  • Providing post-establishment services, tax accounting, intellectual property registration, and regular consulting for businesses after establishment.

If you want to establish a business based on dividing a company, please contact Viet An Law for the best support.

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