An Law Viet Nam Company Limited

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An Law Viet Nam Company Limited
Enterprise Consulting

Business Winding-up

For some reasons, enterprise is unable to maintain necessary condition to exit by Vietnam Law, or/and enterprise owner do not want to maintain enterprise existence; at this moment, enterprise need to proceed wind-up procedure to settle all enterprise’s responsibility, liability and asset.

Enterprise wind-up can be seen as a collection of tasks that need to be implemented to terminate the enterprise’s existence/legal entity legally. Normally, it will be initial with the owner’s decision (via Board of Director meeting, general meetings of shareholders,…) and the final stage is when the Business Registration company updates the enterprise’s status in Nation data.

Relevant legal documents to business registration in Vietnam

  1. Law on Enterprise (2020)
  2. Decision 01/2021/NĐ-CP about business registration
  3. Circular 02/2023/TT-BKHĐT adment Circular 01/2021/TT-BKHĐT about business registration
  4. Circular 01/2021/TT-BKHĐT orient business registration procedure issued by Department of Planning and Investment

Cases that can apply wind-up process

In general, there are 2 cases that Enterprise have to apply windup process, first that is by enterprise owner decision (Terminate the business conduction which are written in Company regulation, or Company does not have enough member by law or other situation decided by enterprise owner) and wind up because the Business Registration Certificate is redeemed.

Windup application when it is decided by enterprise owner

  1. Notification to windup enterprise (follow sample);
  2. Nghị quyết, quyết định và biên bản họp của HĐTV đối với công ty TNHH hai thành viên trở lên, công ty hợp danh, của ĐHĐCĐ đối với công ty cổ phần; nghị quyết, quyết định của chủ sở hữu công ty đối với công ty TNHH MTV về việc giải thể doanh nghiệp (văn bản của chủ sở hữu)
  3. Official notice, decision or General Shareholder meeting minutes.
  4. Debt settlement plan (should any)
  5. Enterprise asset liquidation minutes (should any); List of debt owner and settled debt (including tax debt, employee compulsory insurance payment)

Windup process when it is decided by enterprise owner

  1. Step 1. Enterprise owner approve the windup process
  2. Step 2. Enterprise submitted 1 application (Notification, enterprise owner documents, debt settlement plan) to the Business Registration Office where its headquarters were located.
  3. Step 3. 1 Enterprise settle all debt (Tax, charges fees and other responsibility with authority, salary, insurances, business partner debt, bank debt). Step 3.2 Remaining asset plan after all the debt has been settled. Step 3.3 Conduct the headquarter closing procedure, representative offices, business location (these 3 procedures will be done at the same time).
  4. Step 4. After the asset liquidation, debt settlement, close all business locations, enterprise submit 1 notification attached with Enterprise Asset liquidation report; debt owner and settled debt to Business Registration office.
  5. Step 5. After 180 days counting from the date Business registration offices receive application, if there are no written rejection from stakeholders (and enterprise do not withdraw the application), the offices will transfer the legal status of enterprise to National data, changes to winded-up, as well as sending the information to Tax Department, and issues a notification for windup process.

Remarks:

  1. To avoid time-consuming, enterprise should settle/has plan for all debt before submitting the windup application (Step 2)
  2. Enterprise can only complete the windup process after all the asset liability, debt has been settled and not in the middle of any conflict at Court or Arbitrator. If an enterprise is in the insolvency stage, the process will change to bankruptcy.
  3. When enterprise in the process of windup decided by enterprise owner then they shall not have the right to register, amend information about business registration (Ex: Change legal representative)
  4. In the windup process (within 180 days counting from the date of first application submitting to Business Registration office) Enterprise can notify to withdraw the windup application

The Windup process is very complicated, related to different procedure, sectors. It is recommended for enterprises to hire a professional consultant agency during the windup process to prevent mistakes that can affect enterprise owners. Should you have any questions regarding the above allowances, please don’t hesitate to contact An Luat Viet Nam for support and advice.Our law firms with professional lawyers, experience in consulting, support client in completing application, relevant procedures to windup process, guarantee legality and legal benefit of client business.