Dissolution of an enterprise
What are conditions and procedures for dissolution of a company?
Law on Enterprise 2014 provides legal framework relating to the dissolution of an enterprise. The dissolution gives rise to not only obligations of the enterprise to its shareholders/owners but also that to its partners, employees and state agencies. Therefore, the enterprise needs to satisfy some conditions and carry out some procedures as follows
1. Conditions for the dissolution
Under Article 201.2 of the 2014 Enterprise Law, a company is allowed to be disolved when it obeys the following conditions:
- Paying all debts, among others, unpaid salaries, severance allowance, social insurance in accordance with the law; other benefits of employees under the signed collective labor agreement and labor contract; and tax debt;
- Completing all property obligations; and
- Not in the process of resolution of a dispute at a court or arbitration center
2. Procedure for dissolution of an enterprise
2.1. In case of the dissolution due to the expiry of the operation term stated in the company’s charter without a decision to extend it; due to the company’s decision; or due to the lack of minimum number of members within 06 consecutive months without carrying out procedures for conversion of the form of company
The company need to carry out the following procedures
Step 1: Notifying the dissolution of the company to the business registration agency (“BRA”)
Under Article 202 of the 2014 Enterprise Law, the company shall send a notice of the dissolution together with the meeting minutes and the decision on dissolution to the BRA within 07 working days from the date of adoption of the dissolution decision
Step 2: Applying for tax clearance certificate at General Department of Customs if the company conducts import and export activities under Article 1.71 of Circular 39/2018/TT-BTC
Step 3: Applying for invalidation of tax code at tax agency.
Circular 95/2016/TT-BTC provides that the company needs to carry out procedures for the invalidation of the tax code at the tax agency.
A set of applications of the invalidation of the tax code includes
- A written request for the invalidation;
- A tax registration certificate or a notice of tax code (an original version); or a written explanation of loss of the tax registration certificate or the notice of tax code;
- A decision to dissolve; and
- A document certifying the fulfillment of tax obligations for import and export activities issued by the General Department of Customs if the company conducts import and export activities
Step 4: Returningseal(s) of the company at police office.
Under Article 59.5 of Decree 78/2015/ND-CP, if the company uses any seal(s) issued by police office, it shall return the seal and the registration certificate of seal sample to the police to obtain a certificate of seal revocation
Step 5: Performing the procedures for the dissolution at the BRA.
The legal representative of the company shall submit a set of applications for the dissolution to the business registration agency within 05 working days from the date of paying all debts of the company.
The set includes the following applications
- A notice of the dissolution;
- A report on asset liquidation; a list of creditors, paid debts (including the payment of tax debts and social insurance debts) and employees after having the decision to dissolve (if any);
- A certificate of seal revocation (if any); and
- The enterprise registration certificate
2.2. In case of the dissolution due to revocation of the enterprise registration certificate or a court’s decision
The dissolution shall be conducted in the following order and procedures:
Step 1: The BRA shall immediately notify the status of the company that is carrying out the procedures for the dissolution on the National Business Registration Portal after issuing a decision to revoke its enterprise registration certificate or after receiving the effective decision of the court to dissolve this company
Step 2: Within 10 days after receiving the decision to revoke the enterprise registration certificate or the court’s decision, the company needs to convene a meeting to make a decision on the dissolution. Then the company sends this decision to the BRA, the tax agency, and employees working at the company and publish it.
Step 3: Carrying out the similar procedures mentioned in paragraph 2.1 above at the General Department of Customs, the tax agency and the police office
Step 4: Performing the procedures for the dissolution at the BRA.
The legal representative of the company shall submit a set of applications for the dissolution to the BRA within 05 working days from the date of paying all debts of the company