What is consolidation of companies in Vietnam? What is the legal status of the consolidated company?
What is consolidation of companies in Vietnam?
Pursuant to Article 200 of the 2020 Law on Enterprises of Vietnam stipulating as follows:
Consolidation of companies
1. Two or more companies (consolidating companies) may be consolidated into a new company (consolidated company), after which the consolidating companies shall cease to exist.
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3. The consolidating companies shall comply with regulations Competition Law on consolidation of companies.
4. After the consolidated company is registered, the consolidating companies shall cease to exist. The consolidated company shall inherit the lawful rights and interests, liabilities, unpaid debts, employment contracts and other obligations of the consolidating companies under the consolidation contract.
5. The business registration authority shall update the status of the consolidating companies to the national enterprise registration database when issuing the Certificate of Enterprise Registration to the consolidated company. In case the consolidating companies are headquartered outside the province in which the consolidated company is headquartered, the business registration authority of the province in which the consolidated company is headquartered shall make the update.
Thus, two or more companies may be consolidated into a new company and ceasing existence of the original enterprises is considered consolidation of companies.
What is consolidation of companies in Vietnam? What is the legal status of the consolidated company?
What are the regulations on ceasing existence of consolidated companies in Vietnam?
Pursuant to Article 73 of Decree 01/2021/ND-CP stipulating as follows:
Ceasing existence of divided company, consolidating companies and acquired companies
1. After the transferee companies (from a full division), consolidated company or acquiring company are/is issued with enterprise registration certificate, the legal status of the divided company, consolidating companies or acquired companies shall be changed into “fully divided, consolidated or merged”. The Business Registration Offices of provinces where the divided company, consolidating companies or acquired companies are headquartered shall send relevant information to tax authorities. The tax authority shall send information about the enterprise’s statement and transfer of tax liabilities to the Business Registration Office.
2. Within 01 working day from the day on which the tax authority notifies that the divided company, consolidating company or acquired company has completed the statement and transfer of tax liabilities, the Business Registration Office of province where the divided company, consolidating company or acquired company is headquartered shall change the legal status of this company on the National Enterprise Registration Database into “cease to exist” according to the process on the National Enterprise Registration Information System.
3. The Business Registration Office shall cease the existence of branches/representative offices/business locations of the divided company, consolidating company or acquired company before ceasing the existence of these companies on the National Enterprise Registration Database according to the process on the National Enterprise Registration Information System.
4. In case of merger, if the enterprise registration information of the acquiring company is unchanged, within 10 working days from the completion of the merger, the acquiring company shall give a written notification to the Business Registration Office of province where it is headquartered for ceasing the existence of the acquired company. The notification must be accompanied by the documents mentioned in Points a and b Clause 2 Article 61 hereof.
5. In case the divided company, consolidating company or acquired company is headquartered outside the province where the transferee company, consolidated company or acquiring company is headquartered, the Business Registration Office of the province where the latter is headquartered shall send information to the Business Registration Office of the province where the former is headquartered to cease their existence on the National Enterprise Registration Database according to the process on the National Enterprise Registration Information System.
Thus, after a consolidated company is issued with an enterprise registration certificate, the legal status of consolidating companies shall be changed into “fully consolidated”.
The Business Registration Offices of provinces where the consolidating companies are headquartered shall send relevant information to tax authorities. The tax authority shall send information about the enterprise’s statement and transfer of tax liabilities to the Business Registration Office.
What are the regulations on the procedures for consolidation?
Pursuant to Clause 2, Article 200 of the 2020 Law on Enterprises of Vietnam, the procedures for consolidation are as follows:
- The consolidating companies shall prepare the consolidation contract and charter of the consolidated company. The contract shall contain:
The names and addresses of the consolidating companies; name and address of the consolidated company; procedures and conditions for consolidation;
Employment plan; deadline and conditions for transfer of assets, shares/stakes, bonds of the consolidating companies to the consolidated company; consolidation time;
- The members, owners or shareholders of the consolidating companies shall ratify the consolidation contract, the consolidated company’s charter, elect or designate the President of the Board of Members, President of the company, Board of Directors, the Director/General Director of the consolidated company and apply for registration of the consolidated company in accordance with this Law.
The consolidation contract shall be sent to the creditors and employees within 15 days from the day on which it is ratified.
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