Can a newly established company that has been operating for 1 year initiate dissolution procedures in Vietnam?

Can a newly established company that has been operating for 1 year initiate dissolution procedures in Vietnam?

Article 207 of the Enterprise Law 2020 provides for cases of and conditions for dissolution of enterprises as follows:

1. An enterprise shall be dissolved in the following cases:

a) The operating period specified in the company's charter expires without an extension decision;

b) The enterprise is dissolved under a resolution or decision of the owner (for sole proprietorships), the Board of Partners (for partnerships), the Board of Members and the owner (for limited liability companies) or the GMS (for joint stock companies);

c) The enterprise fails to maintain the adequate number of members prescribed in this Law for 06 consecutive months without converting into another type of business;

d) The Certificate of Enterprise Registration is revoked, unless otherwise prescribed by the Law on Tax administration.

2. An enterprise may only be dissolved after all of its debts and liabilities are fully paid and it is not involved in any dispute at the court or arbitration. Relevant executives and the enterprise mentioned in Point d Clause 1 of this Article are jointly responsible for the enterprise’s debts.

Thus, there is no limitation on operating time before the enterprise is dissolved, according to this Article, you have the right to decide on the dissolution of the enterprise, however, you must ensure that all debts are paid off and it is not involved in any dispute at the court or arbitration.

How much is fine for failure to initiate dissolution procedures when the operating period expires in Vietnam?

Article 58 of Decree 122/2021/ND-CP stipulates violations against regulations on enterprise dissolution as follows:

1. A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed for any of the following violations:

a) Failure to initiate dissolution procedures when the operating period specified in the company's charter expires without an extension decision;

b) Failure to initiate dissolution procedures when the company fails to maintain the prescribed adequate number of members for 06 consecutive months without converting into another type of business;

c) Failure to initiate procedures for shutting down a branch, representative office or business location before submitting the application for enterprise dissolution.

2. Remedial measures:

The violator is compelled to:

a) initiate enterprise dissolution procedures if any of the violations specified in Points a and b Clause 1 of this Article is committed;

b) initiate procedures for shutdown of the branch, representative office or business location if the violation specified in Point c Clause 1 of this Article is committed.

In Clause 2, Article 4 of Decree 122/2021/ND-CP stipulates as follows:

2. The fines for administrative violations specified in this Decree are imposed upon organizations (except for the fines for violations specified in Point c Clause 2 Article 28; Points a and b Clause 2 Article 38; Article 62 and Article 63 of this Decree, which are imposed upon individuals). For the same violation, the fine incurred by an individual is 1/2 (half) that incurred by an organization.

According to this Article, in case the company has expired the operating period specified in the company's charter, there is no decision on extension without carrying out the dissolution procedures, the company may be fined from VND 20,000,000 to VND 30,000,000 according to the provisions of law in Vietnam.

What are regulations on application for dissolution of an enterprise in Vietnam?

Article 210 of the Law on Enterprises 2020 stipulates that application for dissolution is as follows:

1. An application for dissolution of an enterprise shall consist of:

a) The notification of the enterprise’s dissolution;

b) The report on liquidation of the enterprise’s assets; list of creditors and paid debts, including tax debts, social insurance, health insurance, unemployment insurance of employees after the dissolution decision is issued (if any).

2. Members of the Board of Directors (for joint stock companies), members of the Board of Members (for limited liability companies), the owner (for sole proprietorships), the Director/General Director, general partners and legal representatives shall be responsible for the accuracy and truthfulness of the application.

3. In case the application contains inaccurate or false information, the persons specified in Clause 2 of this Article shall jointly provide the outstanding employees’ benefits, taxes and other debts and bear personal responsibility for the consequences that occur within 05 years from the day on which the application is submitted to the business registration authority.

Above are the provisions of the law on application for dissolution of an enterprise in Vietnam.

Best Regards!