Question: Hi we would like to inquire on how to close the company in Vietnam. Kindly send us quote.
Answer: We understand that you are seeking legal assistance on enterprise dissolution procedure in Vietnam. Therefore, we are grateful to present our Legal Service Proposal for your review and consideration.
1. PRELIMINARY COMMENTS
We assume that company located in Vietnam (“the Company”) is a foreign-invested enterprise. Voluntary liquidation of a solvent company in Vietnam (technically known as a dissolution) is seen by many as a daunting process. In particular, for foreign invested enterprises, terminating a current investment project can be a time-consuming process.
From a tax and regulatory perspective, there are a number of required procedures and documents that an enterprise needs to comply with in a fairly rigid statutory timeframe. The main thing to remember throughout the process is that the dissolving company (DC) should pay close attention to the involvement of all key stakeholders, i.e. the employees, customers, creditors, business partners and relevant authorities.
In compiling these documents, the DC should pay attention to five main categories: (i) General (dissolution notice, subsidiaries and branches); (ii) Labour (headcount, severance allowances, insurance contributions); (iii) Contracts (suppliers, customers, utilities and land lease); (iv) Assets (fixed assets, inventories); (v) Tax (VAT, CIT, PIT, Custom duties and FCT).
The board of management will need to prepare a resolution on dissolution, based on the aforementioned documents, and have it passed by the investors. After that, the DC should send the approved resolution to all relevant stakeholders and announce it publicly before commencing the dissolution process.
1.1. Dissolution Conditions for Foreign Invested Companies
Under the Article 201 of the Law on Enterprise 2014, the cases and conditions for dissolution of foreign investment companies:
Article 201. Cases of and conditions for dissolution
- A enterprise shall be dissolved in the following cases:
- The operation period written in the company’s charter expires without a decision on extension;
- The dissolution is decided by the owner of the sole proprietorship, by all general partners of the partnership, by the Board of members or owner of the limited liability company, or insurance the General Meeting of Shareholders of the joint-stock company;
- The company fails to maintain the minimum number of members prescribed by this Law for 06 consecutive months without following procedures for business conversion;
- The Certificate of Business registration is
- The enterprise shall only be dissolved if all debts and liabilities can be settled and the enterprise is not involved in any dispute at a court or arbitral tribunal. Relevant managers and enterprises mentioned in Point d Clause 1 of this Article are jointly responsible for the enterprise’s
1.2. Issuance of Enterprise Registration Certificate (ERC)
Currently, there are many foreign invested companies are being operated under Investment Certificates which were granted before the Law on Investment 2014 comes into effect.
If Client is the case, before the dissolution procedure, Client must implement procedures to separate Enterprise Registration Certificate (ERC) from Investment Certificate. Upon issuance of the ERC, foreign invested company can implement procedures for company dissolution.
Roadmap for implementation of dissolution can be outlined shall be as follows:
- Step 1: The Company closes all of its branches, representative offices, and business locations.
- Step 2: The Company liquidates its assets, settles all debts and liabilities with relevant parties such as employee, state authorities, landlord,
- Step 3: The Company terminates its Investment Project. Returning Investment License to HCMC Department of Planning and
- Step 4: Submitting the Notice on dissolution intent to HCMC Department of Planning and Investment by soft-copy through online
- Step 5: Upon obtainment of Acknowledgment of Notice on dissolution intent issued by HCMC Department of Planning and Investment, the Company will conduct tax finalization for purpose of dissolution at Tax
- Step 6: After completion of enterprise dissolution procedure at Tax Authority, the Company will receive Tax Code Closure Announcement. Upon obtainment of this announcement, the final application dossier shall be signed and sealed by legal representative of the
- If the Company has its corporate seal granted by HCMC Public Security Department, it need to conduct legal procedures of seal return to such department accordingly, a Certificate of corporate seal withdrawal will be issued. Otherwise, it is not
- Step 7: Upon obtainment of Certificate of corporate seal withdrawal (if any), the Company shall submit complete application dossier for company dissolution to HCMC Department of Planning and Investment by soft-copy through online
- Step 8: Upon obtainment of Acknowledgement on company dissolution application, the Company shall submit complete application dossier by hard-copy to receive the result.
2.SCOPE OF SERVICES
We anticipate that our work will comprise of the following 4 main work streams. These are the key work streams required in any liquidation process. Depending on the Company’s specific position, other work may be required.
Work stream 1: Assistance with liquidation process
i. Provide the company on overview on the regulatory and administrative procedures for the liquidation
ii. Assist with drafting various documents for submission to the relevant authorities in relation to the liquidation process, including but not limited to:
- Draft a liquidation notice for submission to the licensing body;
- Draft the company’s sample of decision and dissolution;
- Draft necessary documents for management’s review and decision, such as standard notification to the company’s suppliers, customers and information letter to the licensing authority regarding the company dissolution;
- Draft and compile other documents required by licensing authority, tax, customs and police offices for management’s review and finalization;
iii. Submit the dossier after review and decision by the management and following up the approval process of relevant authorities, obtaining approval from relevant authorities;
iv. Assist with return of corporate seal;
v. Assist in planning the liquidation process;
vi. Advice most appropriate approach for liquidation process;
Work stream 2: Assist with the sales of land and building
i. Advice on general land issues in relation to the liquidation.
Work stream 3: Labor
i. Advice on general labor issues in relation to the liquidation;
ii. Analyze impacts of liquidation and administrative procedure with respect to labor;
iii. Assist the company in preparing the labor redundancy plan;
iv. Draft termination agreements with employees for management’s review and decision or review such termination agreements prepared by the company.
Work stream 4: Tax
i. Advice on various taxation matters which may arise in relation to the liquidation;
ii. Advice tax implications of transfer of assets, redundancy payments ;
iii. Advice on tax implications for the shareholders of liquidated company
iv. Process the closure of tax code (deregistration) Our scope of work does not include the following:
- Follow up with the parties concerned to obtain their consent, except specifically stated above;
- Valuations of assets to be transferred;
- Drafting documents for the asset transfer;
- Dealing with other authorities not mentioned above in the scope of work;
- Proposing or agreeing any settlements to the tax auditors in a tax audit;
- Working with the Tax Agency for Tax Clearance;
- Making any decisions on behalf of the company’s management;
- Any services that are not included in the scope of work mentioned
The Deliverables will include documents prepared in Vietnamese as required for submission to licensing bodies. The Company will review, approve and where necessary sign these documents.
SB Law may provide English translations of these documents (or extracts thereof), but the translated documents should be used for reference other the purposes of discharging the Company’s responsibility for the positions taken and the underlying company information.
4. KEY ASSUMPTIONS, EXCLUSIONS AND LIMITATIONS
The scope of our advice and our ability to meet any reporting deadlines will be subject to the following assumptions and limitations:
- All information requested by us is made available for our review on a timely basis;
- Except as specifically indicated in our report, we will not verify the accuracy of any information provided to us by the Company, whether verbally or in writing;
- The information and commentary given in our report will be solely for the use of the party to which such report is addressed. Our report may not be published or reproduced or referenced in whole or in part or circulated to unintended recipients without our express prior written consent;
- All advice given will be based on our understanding and interpretation of the law and in accordance with current professional practice and guidelines. Changes in the law and in interpretations may take place before our advice is acted upon or may be retrospective in effect;
- Unless otherwise specifically instructed, we shall not be responsible for the implementation or on-going monitoring of any structures or arrangements which we may have been involved in setting
5. PROFESSIONAL FEE
Performing scope of works as mentioned in Item 2 above.
Scope of Work
Selection (Mark “X”)
|Work stream 1: Assistance with |
|Work stream 2: Assist with the sales of land and building||Provide after review of actual documents|
|Work stream 3: Labor||Provide after review of actual documents|
|Work stream 4: Tax||Shall be handled by Tax Partner of SBLAW|
Note: The professional fee is exclusive of 10% Value Added Tax, and other administrative fine/penalty, or disbursement incurred on Client’s behalf (if any).
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