When a foreign investor wants to terminate all his legal rights and obligations, the investor must complete the order and procedures for company dissolution in accordance with the Law on Enterprises of Vietnam. This article will summarize all legal information about the documents and procedures for company dissolution in Vietnam.
What Does Company Dissolution Mean?
The dissolution of a company is typically defined as the termination of a company’s existence or the liquidation of its assets. The dissolution process usually involves the transfer of ownership to another entity or the termination of a company’s operations and liquidation.
The dissolution process is often referred to as winding up, which means that it is an administrative process that terminates a company’s affairs and distributes its assets among its shareholders, creditors, and other parties.
It can be a time-consuming process, especially if there are many stakeholders involved in the dissolution process, including lawyers and financial advisors. However, it is necessary for a company to dissolve itself before it goes bankrupt as part of legal proceedings or when it decides that it no longer has enough value in order to continue operating as a going concern.
Why should the company be dissolved?
There are many reasons why a company should be dissolved.
- The main reason why companies go bankrupt is because they fail to pay their debt obligations. When a company fails in this way, it can be difficult for creditors to collect on their loans because the assets may have been liquidated or sold off by the time they try to collect on them.
- A company can also go bankrupt if its assets are worth less than the amount owed by creditors, in which case the creditors cannot collect anything at all from them.
- A company can be dissolved if it is not making enough revenue, if it is losing money, or if the company has been in business for more than two years and hasn’t reached its financial goals.
- The company doesn’t have a viable plan for growth and clear vision for its future.
- Many companies have been established with the intention of making a difference in the society, but they have reached their end after some years of operation. This is not a bad thing because they have done what they needed to do and there is no more work for them to do at this point.
Conditions to Dissolve a Company in Vietnam
Dissolution of a company in Vietnam is a complex process. There are many steps involved and there are several legal requirements that need to be met before the dissolution process can be finalized.
In order to dissolve a company in Vietnam, there are certain conditions that need to be met. These include:
- The company must have been in operation for at least one year.
- The company must have paid all its taxes and fees for the last three years;
- The company must not owe any money or obligations to other parties;
- The company’s assets must not exceed VND 1 billion.
- The liquidation committee cannot hold more than 10% of the shares of the company;
- There is no pending litigation against the company;
- The liquidation committee cannot hold more than 25% of shares in other companies (if any);
- There is no pending litigation against directors or officers of the dissolved corporation or their family members or relatives (if the dissolution is by sale of assets)
Required Documents to Implement Company Dissolution
Company dissolution documents include:
- Notice of dissolution of the company;
- Minutes of liquidation of company assets; list of creditors and payment debts, including tax, social insurance, health insurance and unemployment insurance debts of employees after the dissolution decision (if any);
- Tax authority’s confirmation of tax identification number closure; (if tax has not yet been registered, a written certification from the tax office is required);
- The certificate of the police agency on the return of the seal;
- Resolution or decision and copy of meeting minutes of the Members’ Council/General Meeting of Shareholders/Owner on the dissolution of the company;
- Debt repayment plan (if any).
Procedure of dissolving a company in Vietnam
The procedure of dissolving a company in Vietnam is quite complicated and depends on the type of company. It consists of 4 steps:
Step 1: Registering the dissolution with the Ministry of Justice: The company must submit the dissolution request to the Ministry of Finance within two months before it wishes to dissolve. After receiving a written request from the Ministry of Finance, the Tax Department performs an inspection in order to ascertain whether or not the company can dissolve and pay its debts.
Step 2: Paying taxes and fees to the Ministry of Finance: The company shall pay taxes and fees to the Ministry of Finance in accordance with the law before dissolving the company.
Step 3: Issuing a public announcement about the dissolution: If after three month’s time, there are no objections by people who have been notified about this matter, then it is approved. A final legal notice of company dissolution is sent to any entity that may be interested in the company, including creditors, shareholders and owners, customers, employees and any other interested party.
Step 4: Closing down the company.
Expected time of company dissolution
Within 180 days from the date of sending the dissolution decision to the Department of Planning and Investment without the company’s comments or written opinions of related parties or within 05 working days, the Registrar business updating company status on the National Information System and the company registration database;
The company dissolution in Vietnam can be very complicated for foreign investors. In order to legally dissolve the company, you need to carefully study the legal information and regulations of Vietnamese law. Hope the above article of LTS LAW has provided you with useful information!