Company dissolution procedure

Question:
What is the legal procedure for dissolving a foreign-invested limited liability company A (in which our company holds a 30% capital contribution)?

Answer:

1.1. Conditions for dissolution:

According to Article 207.2 of the Law on Enterprises 2020, Company A may only be dissolved if it is able to settle all debts and other financial obligations and is not involved in any legal disputes at court or arbitration.

1.2. Dissolution procedure:

The dissolution procedure typically involves the following key steps:

Step 1: Passing the resolution on company dissolution
Pursuant to Article 208.1 of the Law on Enterprises 2020, Company A must convene a Members' Council meeting to pass a dissolution resolution as follows:

Authority:

The Members' Council convenes a meeting to approve the dissolution. This resolution must be passed by a vote representing at least 75% of the charter capital of the attending members, unless the company’s Charter provides for a higher threshold.

Contents of the dissolution resolution:

• Name and head office address of the enterprise.
• Reason for dissolution (e.g., poor business performance).

• Time limit and procedures for liquidation of contracts and payment of the company’s debts.
• Plan for handling labor contracts.
• Full name and signature of the company’s legal representative.

Step 2: Public notification of the dissolution decision
a. Within 7 working days from the date of passing the dissolution resolution, the company must send a notice of dissolution to:

• The business registration authority;
• The tax authority;
• All employees of the company.

The notice must be accompanied by:

1. The minutes and resolution of the Members' Council on the dissolution of Company A;
2. A plan for debt settlement (if any).

1. The dissolution decision must be published on the National Business Registration Portal and publicly posted at the company’s head office and any branches or representative offices (if any).
2. If the company has any outstanding financial obligations, it must send the dissolution resolution together with a debt settlement plan to creditors and any parties with related rights or obligations. This notice must include the creditor’s name and address, the amount, due date, payment method, and dispute resolution mechanism.

Step 3: Asset liquidation and debt settlement

208. Pursuant to Article 208.2 of the Law on Enterprises 2020, Company A is responsible for organizing the liquidation of its assets, unless its Charter provides for a separate liquidation committee.
209. Debt payment order:

According to Article 208.5 of the Law on Enterprises 2020, Company A must settle its debts in the following order of priority:

1. Unpaid salaries, severance allowances, social insurance, health insurance, and unemployment insurance, as required by law, and other employee entitlements under collective labor agreements and employment contracts;
2. Tax debts;
3. Other debts.
4. After paying all debts and dissolution-related expenses, any remaining assets shall be distributed to the company’s members in proportion to their capital contributions.

Your company, holding a 30% stake, will be entitled to receive the remaining value in proportion to this percentage after Company A has fulfilled all its financial obligations. If assets are insufficient, the company is only liable within the amount of contributed capital.

Step 4: Filing the dissolution dossier
Before submitting the application for company dissolution, Company A must complete procedures to close any branches, representative offices, and business locations with the local business registration authority.

Dossier submitted to the Department of Planning and Investment:

Pursuant to Clause 7 Article 208 and Clauses 1 and 4 Article 210 of the Law on Enterprises 2020, within 5 working days from the date of completing all debt payments, the legal representative of Company A must submit a dissolution dossier to the business registration authority, including:

Notice of enterprise dissolution;

Report on asset liquidation; list of creditors and debts already settled, including taxes and social/health/unemployment insurance for employees (if any)

Step 5: Updating the enterprise's legal status in the national business registration database
a. After receiving the dissolution dossier, the business registration office will send the information to the tax authority. Within 2 working days of receipt, the tax authority must respond regarding the fulfillment of the company's tax obligations. Within 5 working days from the date of receiving the dissolution dossier, if the business registration office receives no objections from the tax authority, it will update the company’s status in the National Business Registration Database to "dissolved" and issue a formal notice.

b. If, after 180 days from the date of receiving the dissolution notification and resolution, no dissolution application is submitted and no written objections are received, the business registration office will change the company’s status to “dissolved” in the database, notify the tax authority, and issue a formal dissolution notice within 3 working days after the 180-day period ends.

c. For companies using printed invoices or self-printed invoices, the tax authority will issue a notice stating that the invoices are no longer valid.

Legal Basis: Clause 5, Article 70 of Decree No. 01/2021/NĐ-CP.

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