Company dissolution in Vietnam: key considerations for foreign investors
International investors are taking advantage of the consistent growth opportunities available in Vietnam, and when their investments and local entities become obsolete or require changes within their statutory structure, they often seek to undertake a company dissolution process.
In this article, we delve into the conditions, procedures and practical provisions regarding company dissolution in Vietnam, and we highlight important elements such as taxation compliance, bank accounts and VAT refund.
Cases, conditions and prohibited actions
Following the Enterprise Law 2020, there have several cases where an enterprise may be dissolved:
- 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 private enterprise), 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 six 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
If the Certificate of Enterprise Registration of an enterprise in Vietnam is revoked, the relevant executives and the enterprise are jointly responsible for the enterprise’s debts. In Vietnam, an enterprise may only be dissolved after all of its debts and liabilities are fully paid and is not involved in any court dispute or arbitration settlement.
From the issuance date of the dissolution decision, the enterprise and its executives are prohibited from the following actions:
- Concealing, disguising assets
- Denying or reducing the creditors’ claims to the debts
- Convert unsecured debts into debts secured with the enterprise’s assets
- Concluding new contracts, except for dissolving the enterprise
- Pledging, donating, leasing out assets
- Terminating effective contracts
- Raising capital in any shape or form
Procedure and timeline
When commencing the dissolution procedure, the enterprise will work with the business registration authority, tax department and other relevant authorities. For the purpose of this article, we have detailed the dissolution process, excluding the case when the Certificate of Enterprise Registration is revoked.
The process includes six (6) basic stages:
