PROCEDURES FOR DISSOLUTION OF FDI ENTERPRISES, FOREIGN-INVESTED ENTERPRISES IN VIETNAM

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  Nowadays, the number of foreign investors investing in Vietnam is increasing rapidly due to preferential policies on investment. However, due to some reasons, foreign investors want to terminate operating in Viet Nam. So, how do you close FDI enterprises in Vietnam ( dissolution of FDI enterprises )? In this article, let's find out the relevant legal regulations on this issue with OTIS LAWYERS. 

Legal grounds

Law No. 59/2020/QH14 dated June 17, 2020 on Enterprises

Decree No. 01/2021/ND-CP dated January 04, 2021 on enterprise registration

Circular No. 01/2021/TT-BKHDT dated March 16, 2021 on guidance on enterprise registration

The concept of Dissolution of FDI enterprises

According to Clause 1, Article 207, Law on Enterprises in 2020, and Clause 6, Article 41 of Decree No. 01/2021/ND-CP, dissolution of a foreign-invested enterprise is the termination of its existence of enterprises under the decision of enterprises or the competent authority. 

Cases of Dissolution of FDI enterprises

According to Article 207 of the Enterprise Law 2020, cases of dissolution of foreign-invested enterprises are as follows:

  • The operating period specified in the company's charter expires without an extension decision;
  • 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);
  • 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;
  • The Certificate of Enterprise Registration is revoked, unless otherwise prescribed by the Law on Tax administration.

Conditions for dissolution of FDI enterprises

An FDI 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. 

Dissolution procedures of of FDI enterprises

According to the provisions of Article 207,208 of the Enterprise Law 2020 and Article 70 of Decree 01/2021/ND-CP on enterprise registration, dissolution procedures of a foreign-invested enterprise include the following steps:

Step 1: Termination of investment projects

Enterprises shall send the termination decision to the investment registration authority within 15 days from the date of making the decision together with the investment registration certificate ;

Step 2: Enterprises issued a decision resolution on the dissolution of FDI enterprises

Such a resolution or decision shall contain the following information:

  • The enterprise’s name and headquarters address;
  • Reasons for dissolution;
  • Time limit and procedures for finalization of contracts and payment of the enterprise’s debts;
  • Plan for settlement of obligations under employment contracts;
  • Full name and signature of the owner of the sole proprietorship, the company’s owner, the President of the Board of Members, the President of the Board of Directors;

Step 3: Submit the application for dissolution to the business registration authority 

Within 07 working days from the day on which the resolution or decision on dissolution is ratified, the enterprise shall send a notification on dissolution to the Business Registration Office of province where it is headquartered. The notification must be accompanied by the following documents:

  • The resolution or decision and the copy of the minutes of meeting of the Board of Members of the multi-member limited liability company or partnership, or of the General Meeting of Shareholders of the joint-stock company, or the resolution or decision of the owner of the single-member limited liability company on enterprise dissolution;
  • The debt payment plan (if any).

Step 4:  The liquidation of the enterprise’s assets

According to Clauses 2 and 5, Article 208 of the Enterprise Law in 2020, the owner of the sole proprietorship, the Board of Members or the owner, the Board of Directors directly organizes the liquidation of the enterprise’s assets, unless the company's charter requires establishment of a separate liquidation organization;

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.

Step 5: Close the tax identification number

Enterprises send an official letter to the tax office (enclosed with a notarized copy of the Business Registration Certificate and the Tax Registration Certificate) to request tax finalization and tax identification.

A dossier of tax code closure includes:

- Official letter to close the tax code of the business

– Minutes confirming the refund of the invoice

– Financial statements certified by auditors

- Book of accounting vouchers attached

– Decision on the dissolution of the Owner, Chairman of the Board of Members/Chairman of the Board of Directors of the Company, depending on the type of business chosen by the enterprise;

Step 6: Procedures at business registration authority

Within 7 days from the date of payment of all debts of the company, the legal representative of the foreign-invested company shall submit the application for dissolution to the business registration authority where the company is located  head office or through the National Business Registration Portal at the address dangkytinhdoanh.gov.vn.

After 180 days from the receipt of the dissolution resolution or decision 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;

Step 7: Return the seal

If an enterprise uses a seal issued by a police authority, the seal and the certificate of seal registration shall be returned to the police authority when following dissolution procedures.

Enterprise Dissolution Service of OTIS LAWYERS

OTIS LAWYERS is always proud to be a professional unit in the field of consulting on enterprise dissolution service for foreigners under the law. With a team of highly qualified lawyers, extensive experience, and dedication to clients, we believe that we will provide investors with the most professional services, at a reasonable cost and the fastest processing time. We commit that all customer information is confidential and customer interests always come first. Please contact:

OTIS & PARTNERS LAWFIRM

Address: No. K28, Lane 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi City.

Hotline: (+84) 987 748 111

Email: info@otislawyers.vn/ Website: https://otislawyers.vn/ 

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