Comprehensive Guide to Dissolving Foreign-Invested Enterprises in Vietnam

1. Comprehensive Guide to Dissolving Foreign-Invested Enterprises in Vietnam

Dissolving a foreign-invested enterprise in Vietnam can be a complex process. In this guide, we will provide a detailed overview of the dissolution procedure, including cases and conditions, step-by-step procedures, and essential notes for foreign investors. Let's navigate the intricacies of this process together.

2. Understanding the Dissolution of Foreign-Invested Enterprises

The current law lacks a precise definition of a "foreign-invested enterprise." However, Clause 22, Section 3 of the Investment Law 2020 defines it as an organization with foreign investors as members or shareholders. According to the provisions of Clause 1, Article 207 of the Law on Enterprises 2020 and Clause 6, Article 41 of Decree No. 01/2021/ND-CP on business registration, dissolution of a foreign-invested enterprise signifies the termination of its existence, either by the company's will or at the behest of competent authorities. This process results in the cessation of the company's legal status and related rights and obligations. Once the dissolution procedure concludes, the updated status is reflected on the National Business Registration Portal.

3. Cases and Conditions for Dissolution

Cases of Dissolution

Voluntary Dissolution

• The company's charter-specified operating period expires without an extension decision.
• The enterprise is dissolved under a resolution or decision of the owner, board of partners, board of members, or the general meeting of shareholders, depending on the enterprise type.

Compulsory Dissolution

• The enterprise fails to maintain the minimum required number of members for six consecutive months, without transitioning to another business type.
• The Enterprise Registration Certificate is revoked, unless otherwise specified by the Law on Tax Administration.

Conditions for Dissolution

An enterprise can be dissolved only after meeting the following conditions, as provided in Clause 2, Article 207 of the Law on Enterprise 2020:

• All debts and liabilities are fully settled.
• The enterprise is not involved in any ongoing disputes in court or arbitration.

4. Procedures for Dissolution

Case 1: Voluntary Dissolution and Dissolution Due to Lack of Members

Step 1: Approve Dissolution Resolutions and Decisions

To initiate the dissolution, the company must first hold a meeting to approve the dissolution decision. This decision should cover key aspects, including:

• Name and address of the company's head office.
• Reason for dissolution.
• Procedures for contract termination and debt payment.
• Plan for managing obligations arising from labor contracts.
• Full name and signature of the legal representative and the owner of the company or enterprise.

Step 2: After Voting on Dissolution Decision

Within seven days from the approval of the dissolution decision, the company must:

• Send resolutions, decisions on dissolution, and minutes of company meetings to relevant authorities.
• Post resolutions and decisions on dissolution on the National Portal for business registration.
• Notify creditors and parties with related rights, obligations, and interests, especially if there are unpaid financial obligations.

Step 3: Pay Off Debts

The owner, board of members, or board of directors, as specified by the company's charter, will directly organize asset liquidation and debt payment. Debts are settled in the following order:

• Debts related to employee salaries, severance allowances, social insurance, and other benefits.
• Tax debts.
• Other debts.

Step 4: Submit the Application for Dissolution

The enterprise's legal representative should submit the dissolution dossier to the business registration agency within five working days from the date of settling all debts. This dossier includes various documents, such as a notice of enterprise dissolution and a report on the liquidation of corporate assets.

Step 5: Tax Agency Review

After receiving information from the Business Registration Authority, the tax authority reviews the fulfillment of the tax payment obligation within two working days.

Step 6: Update Legal Status

If there are no objections or unresolved issues within 180 days from the date of receipt of the dissolution decision, the business registration authority will update the legal status of the enterprise on the national enterprise registration database.

Case 2: Certificate Revocation or Court Decision

Step 1: Notification

The Business Registration Office notifies the dissolution status on the National Enterprise Registration Portal and informs the Tax Authority within one working day after revoking the Certificate of Enterprise Registration or receiving a legally effective Court decision.

Step 2: Decision to Dissolve

Within ten days of receiving the revocation decision or court ruling, the enterprise must convene a meeting to decide on dissolution.

Step 3: Pay Off Debts

Debts are settled in the same order as in Case 1.

Step 4: Submit Application

The legal representative must submit the dissolution dossier to the business registration agency within five working days after settling all debts.

Step 5: Issue Notice of Dissolution

If there are no objections or issues within 180 days from the Business Registration Office's announcement of dissolution on the National Business Registration Portal, the legal status of the enterprise is updated to a dissolved state.

5. Key Considerations for Dissolving FDI Enterprises in Vietnam

While the dissolution procedures are generally similar to those in Vietnam, foreign-invested enterprises have specific considerations, including:

• For the termination of an investment project, a foreign-invested enterprise must obtain an Investment Registration Certificate or an equivalent document and follow dissolution procedures.
• The investor must return the Investment Registration Certificate within 15 days of ceasing the investment project, accompanied by written certification of the project's shutdown.
• After fulfilling financial obligations to the State of Vietnam, foreign investors may repatriate assets abroad for liquidation of investment projects.

6. Conclusion

This comprehensive guide outlines the procedures for dissolving foreign-invested enterprises in Vietnam. If you have any further questions or require professional legal advice, please do not hesitate to contact ACC Group for assistance. We are here to support you through this intricate process