The Art of Business Dissolution: Unraveling the Latest 2022 Procedures.

There are numerous administrative procedures that a business must go through, such as formation, merger, consolidation, or cessation of operations. Additionally, business dissolution is an important process to consider when a company faces difficulties in its operations.

So, what are the conditions for a company to be dissolved, and what are the updated procedures for business dissolution in 2021? Let’s find out more in the following article.

1. Documents required for business dissolution

Documents required for business dissolution

The documents required for business dissolution include:

• Tax finalization report with the tax authority or Notification of tax code closure due to dissolution.
• Receipt of the publication of the business dissolution decision;
• Confirmation of customs clearance completion
• Confirmation of bank account closure, or a commitment letter if no bank account was opened
• Original business registration certificate;
• Original seal registration certificate;
• Company chop;
• Termination of operations of branches, representative offices, and locations;
• Dissolution dossier

2. Business dissolution procedures according to the latest regulations

Business dissolution procedures according to the latest regulations

Voluntary dissolution

The steps for voluntary dissolution are as follows:

Step 1 Pass the company dissolution decision

The company must pass this decision before its members. It should include reasons, timelines, debts, and other obligations.

Step 2 Publicly announce the dissolution decision

The company is responsible for notifying all relevant parties with rights and interests related to its operations about this decision once it has been passed.

If the company has any outstanding financial obligations, it must send the dissolution decision along with a settlement plan to its creditors and other parties with rights and obligations.

The notification must include the name and address of the creditor, the amount of debt, the payment deadline, location, and method, as well as the process and deadline for creditors to file complaints.

Step 3 Liquidate assets and settle company debts

Clause 2 and Clause 5, Article 202 of the 2014 Enterprise Law stipulate that the owner of a private enterprise, the Council of Members or owner of an LLC, or the Board of Directors must directly organize the liquidation of the enterprise’s assets, unless the company charter stipulates the establishment of a separate liquidation organization.

After the debts and dissolution expenses have been paid, any remaining responsibilities belong to the owner of the private enterprise, the members, shareholders, or owner of the company.

The liquidation process must not exceed 06 months from the date of passing the dissolution decision. (Point c, Clause 1, Article 202 of the 2014 Enterprise Law).

Step 4 Submit the dissolution dossier

According to Clause 4, Article 203 of the 2014 Enterprise Law, the legal representative of the enterprise must submit the dissolution dossier to the business registration authority within 05 working days from the date of settling all debts of the enterprise. The specific contents of the dissolution dossier are stipulated in Article 204 of this Law.

Step 5 Update the enterprise’s legal status in the National Database on Business Registration

Clause 8, Article 202 of the 2014 Enterprise Law stipulates that enterprise dissolution can be done in two ways:

If dissolution is done through a dossier, after receiving the enterprise dissolution dossier, the business registration authority will send information about it to the tax authority.

Then, within 02 days, the tax authority will send its opinion to the business registration authority. (Article 59 of Decree No. 78/2015/ND-CP)

The business registration authority will update the enterprise’s legal status in the National Database on Business Registration within 05 days from the date of receiving the dissolution dossier.

If, within 180 days from the date of the dissolution notice, there is no objection from related parties in writing, the business registration authority will update the legal status in the National Database on Business Registration.

Compulsory dissolution

This includes the following steps:

Step 1 The business registration authority announces the enterprise’s status as undergoing dissolution procedures on the National Business Registration Portal

Announcement of the decision on enterprise dissolution

The business registration authority must announce the enterprise’s status as undergoing dissolution procedures on the National Business Registration Portal simultaneously with the decision to revoke the Enterprise Registration Certificate or immediately after receiving the effective dissolution decision of the Court.

At the same time, they must publish the decision to revoke the Enterprise Registration Certificate or the Court’s decision.

Step 2 Pass the dissolution decision and send it to the business registration authority, tax authority, employees of the enterprise, and publicly announce the decision

Step 3 Organize the liquidation of assets and settlement of debts

Step 4 Submit a request for enterprise dissolution

Step 5 The business registration authority updates the enterprise’s legal status in the National Database on Business Registration

3. Frequently asked questions about business dissolution procedures

What types of business dissolution are there?

Article 201 of the 2015 Enterprise Law stipulates two forms of business dissolution: voluntary and compulsory.

• Voluntary dissolution is one of the rights belonging to the group of business freedom rights of investors, allowing them to withdraw from the market.
• Compulsory dissolution is a mandatory action that businesses must take as directed by state management agencies when they do not meet legal requirements.

Is asset liquidation mandatory before dissolution?

Mandatory asset liquidation before dissolution

Asset liquidation is a mandatory procedure that must be carried out by the enterprise when proceeding with dissolution, and it must be done in accordance with the proper legal order. Specifically:

Step 1 Establish an asset liquidation council

Step 2 Inspect, evaluate the quality and remaining value of the assets

Step 3 Inspect and evaluate the quality and current value of assets owned by the enterprise

Step 4 Liquidate assets through sale and auction

The above information is for reference only. For any questions or concerns, please contact the relevant department representatives directly for timely support!

Steps for business dissolution

To dissolve a business, the following 6 steps should be followed:

Step 1 Pass a resolution or decision on dissolution

This is done by the business owner, who convenes a meeting and passes a decision on the dissolution of the enterprise.

Step 2 Liquidate the enterprise’s assets

This is carried out by the owner of a private enterprise, the Council of Members or owner of an LLC, or the Board of Directors.

Step 3 Communicate the enterprise dissolution decision to the Business Registration Office

Within 7 days from the date of passing the dissolution decision, the enterprise must send relevant documents to the Business Registration Office where the enterprise’s head office is located.

The required documents include: the dissolution decision, meeting minutes (if any), and debt settlement plan (if there are outstanding debts). At the same time, the decision must be sent to all employees of the enterprise and publicly posted at the head office, branches, and representative offices of the enterprise.

The enterprise must prepare all necessary documents

Within 1 working day of receiving the enterprise dissolution notice, the Business Registration Office will publish the dissolution decision and announce the enterprise’s status as undergoing dissolution procedures on the National Business Registration Portal.

At the same time, the enterprise’s legal status in the National Database on Business Registration will be changed to “UNDERGOING DISSOLUTION PROCEDURES”, and the Tax Authority will also receive this information.

Step 4 The enterprise fulfills its tax obligations with the Tax Authority. It settles any remaining debts and pays any fines according to regulations (if applicable).

Step 5 If the enterprise uses a seal issued by the public security agency, it must return the seal and the Certificate of Registered Seal to the relevant authority.

Step 6 Submit the dissolution registration dossier

Within 5 days from the date of settling all debts, the enterprise must send the dossier to the Business Registration Office.

Note: All activities of the enterprise at its branches, representative offices, and business locations (if any) must be terminated before submitting the dissolution registration dossier.

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