Procedure for Division and Separation of Limited Liability Companies and Joint Stock Companies from January 01, 2021

Procedures for division and separation of limited companies and joint-stock companies - Illustrative image.

According to Clause 2, Article 198 of the 2020 Enterprise Law, the procedures for dividing limited liability companies and joint-stock companies are specified as follows:

- The Board of Members, the company owner, or the General Meeting of Shareholders of the company to be divided shall approve the resolution or decision to divide the company in accordance with this Law and the company's charter.

- The resolution or decision to divide the company must include the following main contents: name and address of the head office of the company to be divided, names of the companies to be established; principles, methods, and procedures for dividing the company's assets; plans for labor utilization; methods of division, duration, and procedures for converting contributed capital, shares, and bonds of the company to be divided into the newly established companies; principles of handling the obligations of the company to be divided; duration for the implementation of the division of the company.

- The resolution or decision to divide the company must be sent to all creditors and notified to employees within 15 days from the date of the decision or resolution;

- Members, the company owner, or shareholders of the newly established company shall approve the charter, elect or appoint the Chairman of the Board of Members, Chairman of the company, Board of Directors, Director or General Director, and proceed with business registration according to the 2020 Enterprise Law.

In this case, the business registration dossier for the new company must be accompanied by the resolution or decision to divide the company as specified.

In addition, Clause 3, Article 199 of the 2020 Enterprise Law specifies the procedures for separating a limited liability company and a joint-stock company as follows:

- The Board of Members, the company owner, or the General Meeting of Shareholders of the company to be separated shall approve the resolution or decision to separate the company in accordance with this Law and the company's charter.

- The resolution or decision to separate the company must include the following main contents: name and address of the head office of the company to be separated; name of the separated company to be established; plans for labor utilization; methods of separating the company; value of assets, rights, and obligations to be transferred from the company to be separated to the separated company; duration for the implementation of the separation of the company.

- The resolution or decision to separate the company must be sent to all creditors and notified to employees within 15 days from the date of the decision or resolution;

- Members, the company owner, or shareholders of the separated company shall approve the charter, elect or appoint the Chairman of the Board of Members, Chairman of the company, Board of Directors, Director or General Director, and proceed with business registration according to this law.

Detailed content at 2020 Enterprise Law, issued on June 17, 2020.

Le Vy

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE