TERMINATION OF BUSINESS IN VIETNAM

For the foreign investors to terminate all of their legal rights and obligations so the investors have to implement a full sequence, the procedure to the dissolution of the company under The Law on Company. These regulations are stipulated from Article 207 to Article 210 of The Law on Company. We would like to summarize some steps to close a company in Vietnam / To terminate a company in Vietnam as follows:

Legal documents

• The Law on Company 2020;
• Decree 01/20221/NĐ-Cp, January 01, 2021;
• Circular 01/2021/TT-BKHĐT March 16, 2021.

The problems and conditions for dissolution of company

• The operating period specified in the company's charter expires without an extension decision;
• The company is dissolved under a resolution or decision of the owner (for sole proprietorships), the Board of Partners (for partnerships), the Board of Members and the owner (for limited liability companies) or the GMS (for joint-stock companies);
• The company fails to maintain the adequate number of members prescribed in this Law for 06 consecutive months without converting into another type of business;
• The Certificate of Company Registration is revoked unless otherwise prescribed by the Law on Tax administration.

The company may only be dissolved after all of its debts and liabilities are fully paid and it is not involved in any dispute at the court or arbitration. Relevant executives and the company have the Certificate of Company  Registration is revoked are jointly responsible for the company’s debts.

Sequence, procedure implement dissolution of the company with foreign capital

Step 1: The company approval dissolution decision company

A dissolution resolution or decision shall contain the following main information:

• Company’s name and headquarters address;
• Reason for dissolution;
• Time limit and procedures for finalization of contracts and payment of the company’s debts; payment term debt, liquidation of contracts must not exceed 06 months;
• Plan for settlement of obligations under employment contracts;
• Full name and signature of the owner of the private company, the owner of the company, the Chairman of the Board of Members, the Chairman of the Board of Directors;

Step 2: The company sends the dissolution documents to competent state agencies

• Within 07 working days from the ratification date, the resolution or decision on dissolution and the minutes of the meeting shall be sent to the business registration authority, tax authority, and the company’s employees. The resolution or decision shall be posted on the National Company Registration Portal, displayed at the company’s headquarters, branches, and representative offices.
• In case the company still has unpaid debts, the resolution or decision and the debt payment plan shall be sent to the creditors and persons with related rights, obligations, and interest. The debt payment  plan shall contain the creditors’ names, debts, repayment time, location and method; method and time limit for settling creditors’ complaints;

Step 3: The company will implement liquidating its assets

A private company, the Board of Members and the owner (for limited liability companies), The Board of Directors (for joint-stock companies) is directly organized liquidation its assets unless in the case Company’s Charter is stipulated establishing

of a separate liquidation organization.

Step 4: Implementing the procedure to close the company tax code

• Depending on the practice of the company’s accounting documents, the procedure to close the tax code will last from 06 mounts or more (excluding the procedures for penalties, violations, and late submission);
• In the process of implementing tax finalization procedures, the company will implement reduce labor and settle relevant regimes for employees within the time limit as stipulated in the Labor Code.

Step 5: Return the Seal’s company (round sign)

In this case, the seal’s company issued by the police department so the company will be implementing procedures return seal at the old police department.

Step 6: Submission returns Business Registration Certificate, terminate projects operating

The company’s legal representative shall apply for dissolution to the Business registration authority within 05 working days from the day on which the company’s debts are fully paid;

Expected Time to dissolve the company

After 180 days from the date of sending the dissolution decision to the Department of Planning and Investment, without further comments from the company or written objections from relevant parties, or within 05 working days, the business registration authority shall update the company’s status on the national company registration database;

Terminate the investment project

The company with foreign capital is issued Investment Registration Certificate or equivalent document, apart from implementing the procedures for dissolution of the company, so the investors have to announce and re-submit the Investment Registration Certificate to Investment Registration Authority within 15 days from the date termination operating of the investment project.

Some questions related to the dissolution of the company with foreign capital

How long does the company establish have the right to dissolution?

The laws are not specifically stipulate how many years the company has to operate before being dissolved. The company has the right to dissolve according to the cases is stipulated in the Law On Companys.

Does the company do business with long–term losses required to be dissolved?

The company only dissolved in these cases as follows:

• The operating period specified in the company's charter expires without an extension decision;
• The company is dissolved under a resolution or decision of the owner (for sole proprietorships), the Board of Partners (for partnerships), the Board of Members and the owner (for limited liability companies) or the GMS (for joint-stock companies);
• The company fails to maintain the adequate number of members prescribed in this Law for 06 consecutive months without converting into another type of business;
• The Business Registration Certificate is revoked unless otherwise prescribed by the Law on Tax administration.

In what sequence of priorities are the debts of the business paid?

The company’s debts will be paid in accordance sequence of priorities as follows:

• Unpaid salaries, severance pay, social insurance, health insurance, unemployment insurance premiums, and other benefits of employees under the collective bargaining agreement and concluded employment contracts;
• Tax debts;
• Other debts;

After the dissolution costs and debts have been fully paid, the remainder shall be divided among the owner, members/partners, shareholders in proportion to their stakes/shares;

The documents have to submit when implementing company dissolution:

The company dissolution documents including:  

• The notification of the company’s dissolution;
• The report on liquidation of the company’s assets; list of creditors and paying debts, including tax debts, social insurance, health insurance, unemployment insurance of employees after the dissolution decision is issued (if any);
• Confirmation of Tax authorities about close tax code; (in the case not registered tax that shall have confirmation letter of Tax authorities);
• The certificate of the Police department about returned seal;
• The resolution or decision and the copy of the minutes of the meeting of the Board of Members/the General Meeting of Shareholders/the Owner on company dissolution;
• The debt payment plan (if any).

Steps implementing procedure company dissolution

There are 6 steps to implement the company dissolution:

Step 1: The company approval dissolution decision company;

Step 2: Announce the dissolution decision the National Business Registration Portal;

Step 3: Asset liquidation and payment of all company’s debts;

Step 4: Termination of the tax identification number; Finalize taxes and settle benefits for employees;

Step 5: Return seal (if any);

Step 6: Submit the dissolution documents to update the dissolution legal status on the National Enterprise Registration Database.

Service of dissolution the company with foreign capital of Viet An Law Firm

• Consulting on issues arising when dissolving FDI company: posting the dissolution announcement, closing accounts, finalizing social insurance, tax finalization, confirming customs obligations, closing tax codes, return seals, send a notice requesting to delete the name of the company, to terminate the operation of the investment project, etc;
• Proposing termination of tax identification numbers and tax finalization for business dissolution, carrying out procedures with tax authorities to close tax identification numbers for businesses;
• Implementing return seals;
• Submit dissolution documents to update the dissolution legal status of the company in the National Business Registration Database;
• Completing other legal documents according to the actual operation of the business.

Viet An Law is always ready to exchange and assists customers with necessary information. Please contact Viet An Law Firm for specific consultancy.

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