File for the Procedures of Division, Separation, Merger of Companies? Which Company Will Cease to Exist When Executing Division, Separation, Merger?
Which types of businesses can carry out company division?
Based on Article 198 of the Law on Enterprises 2020, it is stipulated as follows:
“Article 198. Division of a Company
1. Limited liability companies and joint-stock companies may divide their assets, rights, obligations, members, and shareholders of the existing company (hereinafter referred to as the divided company) to establish two or more new companies.
2. The procedures for dividing limited liability companies and joint-stock companies are specified as follows:
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5. The business registration authority shall update the legal status of the divided company in the National Database on Business Registration upon issuance of the Business Registration Certificate to the new companies. In case the new companies have their headquarters in provinces or cities under central authority different from where the divided company has its headquarters, the business registration authority where the new companies are headquartered must notify the business registration authority where the divided company is headquartered to update the legal status of the divided company in the National Database on Business Registration.”
Limited liability companies and joint-stock companies can carry out the procedure to divide a company to establish two or more new companies.
Documents for the procedure of dividing, separating, and merging companies? When dividing, separating, or merging, which company will cease to exist? (Image from the internet)
Separating a company does not terminate the existence of the separated company?
Based on Article 199 of the Law on Enterprises 2020, it is stipulated as follows:
“Article 199. Separation of a Company
1. Limited liability companies and joint-stock companies may separate by transferring part of their assets, rights, obligations, members, and shareholders of the existing company (hereinafter referred to as the separated company) to establish one or multiple new limited liability companies or joint-stock companies (hereinafter referred to as the separated companies) without terminating the existence of the separated company.
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4. Upon business registration, both the separated company and the separated companies must jointly bear the responsibility for the obligations, unpaid debts, labor contracts, and other property obligations of the separated company, unless otherwise agreed by the separated company, the separated companies, creditors, customers, and employees of the separated company. The separated companies automatically inherit all rights, obligations, and legal interests apportioned according to the resolution or decision on the company separation.”
Only limited liability companies and joint-stock companies can carry out the procedure to separate a company into one or more new companies. After separation, the separated company will not cease to exist.
All types of companies can carry out the procedure to merge companies?
Based on Article 200 of the Law on Enterprises 2014, it is stipulated as follows:
“Article 200. Merging Companies
1. Two or more companies (hereinafter referred to as merging companies) may merge into a new company (hereinafter referred to as the merged company), and the merging companies will cease to exist.
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5. The business registration authority shall update the legal status of the merging companies in the National Database on Business Registration upon issuance of the Business Registration Certificate to the merged company. In case the merging companies have their headquarters in provinces or cities under central authority different from where the merged company is headquartered, the business registration authority where the merged company is headquartered must notify the business registration authority where the merging companies are headquartered to update the legal status of the merging companies in the National Database on Business Registration.”
Two or more companies can merge into a new company, and the merging companies will cease to operate. According to the above provisions, there is no limit on the types of companies that can carry out the procedure to merge.
What documents are needed when dividing, separating, or merging companies?
Based on Article 25 of Decree 01/2021/ND-CP, it is stipulated as follows:
“Article 25. Business registration documents for companies established based on division, separation, or merger of companies
1. In the case of dividing limited liability companies or joint-stock companies as stipulated in Article 198 of the Law on Enterprises, apart from the documents specified in Articles 23 and 24 of this Decree, the business registration documents for the new companies must include the following documents:
a) Resolution or decision on company division as stipulated in Article 198 of the Law on Enterprises;
b) A copy of the meeting minutes of the Members' Council for limited liability companies with two or more members, or the General Meeting of Shareholders for joint-stock companies on the company division.
2. In the case of separating limited liability companies or joint-stock companies as stipulated in Article 199 of the Law on Enterprises, apart from the documents specified in Articles 23 and 24 of this Decree, the business registration documents for the separated companies must include the following documents:
a) Resolution or decision on company separation as stipulated in Article 199 of the Law on Enterprises;
b) A copy of the meeting minutes of the Members' Council for limited liability companies with two or more members, or the General Meeting of Shareholders for joint-stock companies on the company separation.
3. In the case of merging multiple companies into a new company, apart from the documents specified in Articles 22, 23, and 24 of this Decree, the business registration documents for the merged company must include the following documents:
a) The merger contract as stipulated in Article 200 of the Law on Enterprises;
b) Resolution or decision approving the merger contract of the merging companies and a copy of the meeting minutes of the Members' Council for limited liability companies with two or more members, partnerships, or the General Meeting of Shareholders for joint-stock companies approving the merger contract to establish the new company.”
When dividing, separating, or merging companies, the enterprises should base on their actual needs to identify the components of the dossier according to the above regulations.
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