PROCEDURES FOR ENTERPRISE DISSOLUTION

UNDER THE REGULATIONS  2021

Establishing a business is the starting premise, dissolution is the last step to end a business life cycle. So what is the business dissolution procedure?

OUTLINES

1. Cases that leads to a dissolution of an enterprise to lead to

2. Order and procedures for enterprise dissolution

3. Thinh Tri Law provides consulting services and implements business dissolution procedures

 Thinh Tri provides consulting services and implements business dissolution procedures

1. Common cases for a business to lead to dissolution

• An enterprise is dissolved in the following cases, such as: the enterprise has expired its operation term stated in the company's charter without an operation extension. Resolutions and decisions of the business owner for private enterprises on the dissolution of the enterprise. Members' Council for partnerships on company dissolution. The Members' Council, the company owner, for limited liability companies, shall decide to dissolve the company.  Finally, the General Meeting of Shareholders for joint-stock companies. When the company no longer has the minimum number of members as prescribed by the Law on Enterprises for a period of 6 consecutive months but fails to carry out the procedures for enterprise transformation, the enterprise is forced to carry out the dissolution procedures.
• Enterprises in the course of business activities, committing acts of law violation will have their business registration certificates revoked, unless otherwise provided for by the Law on Tax Administration.
• Therefore, in this case, the enterprise must also carry out dissolution procedures. In addition, the enterprise can only be dissolved when it ensures payment of all debts and other property obligations and is not in the process of settling disputes at Court or Arbitration.

2. Order and procedures for dissolution of enterprises

Order and procedures for an enterprise dissolution

 Accordingly, the dissolution procedures of an enterprise are as follows:

• Step 1: Approve the written decision on dissolution of the enterprise

• To proceed the dissolution of an enterprise, the enterprise must first hold a meeting to pass a written decision on the enterprise dissolution. Thereby, the dissolution must be approved by the owner of a one-member limited liability company; by the Members' Council for a limited liability company with two or more members; by the General Meeting of Shareholders for a limited liability company with two or more members; by the general partners for a partnership company.
• This decision to dissolve the enterprise represents the agreement of the company members on the dissolution; contract liquidation procedures; payment of debts; along with that is a plan to handle arising obligations of the labor contract; and the issue of liquidation of assets after the enterprise is dissolved.
• An enterprise dissolution decision has the following basic contents:

• Company's name; address of the head office of the enterprise.
• The main reason for the dissolution.
• Time limit, procedures for contract liquidation; payment of debts. In addition, the debt payment term; liquidation of the contract does not exceed 06 months from the date the dissolution decision is passed.
• Plans to handle obligations arising from labor contracts.
• Full name and signature of the legal representative of the enterprise.

Step 2: The enterprise must publicize the dissolution decision

• As soon as the decision on dissolution of the enterprise is passed, the enterprise shall be responsible for notifying the dissolution of the enterprise to those who have the rights and interests of this dissolution. In the event that all debts have not been fully paid, the enterprise must enclose the dissolution decision with debt settlement plans to creditors or persons with related rights and obligations. The document must clearly state the full name and address of the creditor; amount owed; the time and place for the enterprise to pay such debt; method and time limit for the enterprise to settle the creditor's complaint.

Step 3: Enterprises liquidate assets and clear debts.

• Pursuant to Clauses 2 and 5, Article 208 of the Law on Enterprises in 2020, who organizes the liquidation of assets and the order of debt payment. Thereby, the owner of a private enterprise, the Members' Council of a limited liability company with two or more members; The company owner of a one-member limited liability company or the Board of Directors must directly establish an asset liquidation organization, unless the company's charter provides for the establishment of a separate liquidation organization. .
• Order of payment of debts of the enterprise:

1. Enterprises give priority to salary payment; social insurance; severance allowance; according to the provisions of current law; other benefits of employees under the signed labor contract and under the collective labor contract agreement.
2. Taxes.
3. Other debts of the enterprise.

• After paying the debts and dissolution expenses, the rest belongs to the company owners, private business owners, members or shareholders. The time limit for contract liquidation shall not exceed 06 months from the date of approval of the dissolution decision.
• Some opinions of customers when consulting at Thinh Tri Law said that  the period of 6 months according to the law is only suitable for small-sized businesses, without complicated transactions and assets with high liquidity. As for large-scale enterprises; have a lot of assets (for example: real estate in many places), it takes a long time to liquidate and the repayment period is longer, the time required by law may not be enough to pay all contracts and debts.
• Thinh Tri Law would like to answer this question: Debt payment and contract settlement are very complicated, so customers need to follow the appropriate order to ensure the rights and interests of the people involved. If this problem is too difficult and complicated, Thinh Tri Law Co., Ltd. is always ready to assist businesses in solving them.

• Step 4: The enterprise submits the dissolution documents at the competent authority

• Pursuant to Clause 4, Article 209 of the Law on Enterprises 2020, the legal representative must send the enterprise dissolution dossier to the business registration agency within 05 working days from the date of payment of all debts. An enterprise dissolution dossier includes:
  • Notice of enterprise dissolution;
  • Report on liquidation of corporate assets; list of creditors and paid debts, including payment of all tax debts and social insurance premiums, employees after deciding to dissolve the enterprise (if any);
  • Seal and seal sample certificate (if any);
  • Business registration certificate.

• Step 5: Update the business dissolution status on the National Database

• Case 1: Dissolution according to the file
  • After the business registration agency receives the complete dissolution dossier of the enterprise, it must send information about the enterprise's dissolution registration to the tax office. Within 02 working days from the date of receipt of information on dissolution, the tax authority must send comments on the dissolution of this enterprise to the business registration agency.
  • Within 05 working days from the date of receipt of the dissolution dossier, the Business Registration Authority shall change the legal status of the enterprise in the National Enterprise Registration Database to the dissolved state if it does not receive the dissolution documents. get the rejection opinion of the tax authority, and at the same time issue a Notice of dissolution of the enterprise.
• Case 2: Automatic dissolution
  • After 180 days from the date on which the business registration authority notifies the dissolution of the enterprise but does not receive the written objections of the relevant parties, the business registration authority will update on the basis of national data on enterprise registration on the dissolution status of enterprises. Tax authorities will have to urgently finalize taxes for businesses. In addition, the law also stipulates the case of revocation of the enterprise registration certificate or the case under a court decision.

3. Thinh Tri Law provides consulting services and implements business dissolution procedures

 
Thinh Tri Law firm

Thinh Tri Law is committed to supporting customers throughout the process of business dissolution and consulting related legal issues after the dissolution is completed. Documents required when carrying out dissolution procedures:

• The document that has completed tax with the tax authority / The document that closes the tax identification number due to the reason of dissolution. If businesses using services at Thinh Tri Law Firm will carry out tax finalization procedures at tax offices or close tax codes, we are committed to providing a full package of support to customers.
• Written notice of the decision to dissolve the enterprise.
• Minutes confirming completion of customs procedures (Thinh Tri Law will confirm customs procedures for businesses).
• Minutes of confirmation of bank account closure/or commitment that the enterprise has not opened a bank account.
• Original Certificate of Business Registration.
• Original Registration of seal sample (if any).
• Legal entity seal.
• The confirmation has terminated all activities of branches and representative offices of the enterprise.
• Enterprise dissolution dossier (Based on the relevant information and documents provided by the enterprise, Thinh Tri Law Co., Ltd. will draft the enterprise dissolution dossier, then transfer it directly to the enterprise for signature) .

Read more

 → Procedures for changing business name.

→ Business merger procedures

→ Enterprise dissolution procedures.

→ Procedures for changing the legal representative of the enterprise.

Thinh Tri Law Firm is always ready to advise and support customers on important issues in the process of carrying out business dissolution procedures. Please contact Thinh Tri Law Firm via Hotline: 1800 63 65