Vietnam: What does the legal status of an enterprise that is undergoing dissolution mean? How are debts of dissolved enterprises resolved?
What does the legal status of an enterprise that is undergoing dissolution mean?
According to the provisions of Clause 4, Article 41 of Decree 01/2021/ND-CP of Vietnam as follows:
Enterprise’s legal status
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4. “undergoing dissolution, fully or partially divided, consolidated or merged” means the legal status of the enterprise that is subject to a dissolution resolution or decision as prescribed in Clause 3 Article 208 of the Law on enterprises; whose enterprise registration certificate is revoked according to a decision issued by the Business Registration Office, unless it is revoked due to tax decision enforcement; that is dissolved according to the court decision as prescribed in Clause 1 Article 209 of the Law on enterprises; that has been fully or partially divided, consolidated or merged and is following procedures for statement and transfer of tax obligations with the tax authority. Starting date of the "undergoing dissolution, fully or partially divided, consolidated or merged” status is the date on which the Business Registration Office notifies that the enterprise is following dissolution procedures on the National Business Registration Portal, or the transferee enterprise, consolidated enterprise or acquiring enterprise is issued with the enterprise registration certificate.
Thus, “undergoing dissolution, fully or partially divided, consolidated or merged” means the legal status of the enterprise that is subject to a dissolution resolution or decision; whose enterprise registration certificate is revoked according to a decision issued by the Business Registration Office except for the cases prescribed in Clause 4, Article 41 of Decree 01/2021/ND-CP of Vietnam.
Vietnam: What does the legal status of an enterprise that is undergoing dissolution mean? How are debts of dissolved enterprises resolved?
What are the dissolution procedures of an enterprise whose operation term has expired as stated in the Charter?
According to the provisions of Clause 3, Article 208 of the 2020 Law on Enterprises of Vietnam, the procedures for dissolution of enterprises whose operation term has expired as stated in the Charter are prescribed as follows:
- Within 07 working days from the ratification date, the resolution or decision on dissolution and the minutes of the meeting shall be sent to the business registration authority, tax authority and the enterprise’s employees. The resolution or decision shall be posted on the National Enterprise Registration Portal, displayed at the enterprise’s headquarters, branches and representative offices.
- In case the enterprise still has unpaid debts, the resolution or decision and the debt payment plan shall be sent to the creditors and persons with related rights, obligations and interest. The debt payment plan shall contain the creditors’ names, debts, repayment time, location and method; method and time limit for settling creditors’ complaints;
- After 180 days from the receipt of the dissolution resolution or decision mentioned in Clause 3 of this Article without further comments from the enterprise or written objections from relevant parties, or within 05 working days from the receipt of the application for dissolution, the business registration authority shall update the enterprise’s status on the national enterprise registration database;
In addition, the business registration authority shall post a notification that an enterprise is undergoing dissolution, the dissolution resolution or decision and debt payment plan (if any) on the National Enterprise Registration Portal right after the resolution or decision is received (if any).
How are debts of dissolved enterprises resolved?
According to the provisions of Clause 5, Article 208 of the 2020 Law on Enterprises of Vietnam on dissolution procedures in Vietnam:
Dissolution procedures in Vietnam
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5. An enterprise’s debts shall be paid in the following order of priority:
a) Unpaid salaries, severance pay, social insurance, health insurance, unemployment insurance premiums and other benefits of employees under the collective bargaining agreement and concluded employment contracts;
b) Tax debts;
c) Other debts;
6. After the dissolution costs and debts have been fully paid, the remainder shall be divided among the owner, members/partners, shareholders in proportion to their stakes/shares;
7. The enterprise’s legal representative shall submit the application for dissolution to the business registration authority within 05 working days from the day on which the enterprise’s debts are fully paid;
8. After 180 days from the receipt of the dissolution resolution or decision mentioned in Clause 3 of this Article without further comments from the enterprise or written objections from relevant parties, or within 05 working days from the receipt of the application for dissolution, the business registration authority shall update the enterprise’s status on the national enterprise registration database;
9. The Government shall elaborate the procedures for enterprise dissolution.
Thus, an enterprise’s debts shall be paid in the following order of priority:
- Unpaid salaries, severance pay, social insurance, health insurance, unemployment insurance premiums and other benefits of employees under the collective bargaining agreement and concluded employment contracts;
- Tax debts;
- Other debts;
- After the dissolution costs and debts have been fully paid, the remainder shall be divided among the owner, members/partners, shareholders in proportion to their stakes/shares.
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