What are the conditions and procedures for dissolving a foreign-invested company (FDI enterprise)? Cases of dissolving a foreign-invested enterprise
After a period of investment and business in Vietnam, foreign invested enterprises (FDI enterprises) will, for some reasons, carry out dissolution procedures. However, the dissolution procedures for FDI enterprises with investment certificates will be more complicated than the dissolution procedures for FDI enterprises without investment certificates. The following article of fdiinvietnam.com will fully share the conditions and procedures for dissolving foreign invested companies in both cases.
Cases of dissolution of foreign invested enterprises
FDI enterprises may dissolve for one of the following reasons:
- The company’s term of operation stated in the charter ends without a decision to extend;
- According to the resolution or decision of the private enterprise owner, of the board of members for a partnership, of the board of members or company owner for a limited liability company, of the general meeting of shareholders for a joint stock company;
- The company no longer has the minimum number of members as prescribed by the Law on Enterprises for each type for a period of 6 consecutive months without carrying out procedures to convert the type of enterprise;
- Having the business registration certificate revoked, except in cases where the Law on Tax Administration provides otherwise.
Conditions for dissolution of foreign invested enterprises
Similar to Vietnamese enterprises, foreign-invested companies must meet the following conditions when dissolving:
- FDI enterprises may only be dissolved when they ensure payment of all debts and other financial obligations and are not in the process of resolving disputes at the People’s Court or arbitration agency;
- The relevant managers and the FDI enterprise whose business registration certificate is revoked shall jointly be liable for the debts of the enterprise.
Documents and procedures for dissolving an FDI company without an investment certificate
1. Case of active dissolution
Enterprises falling into one of the following three cases must carry out voluntary dissolution procedures:
- When the company expires the term of operation stated in the charter;
- When the company is dissolved by decision of individuals or the competent board in the company;
- When the company no longer has the minimum number of members.
The procedure for dissolving a foreign-invested enterprise in one of the three cases mentioned above is as follows:
➨ Step 1: Pass a resolution or decision to dissolve the enterprise
Resolutions and decisions to dissolve an enterprise must include the following main contents:
- Name and address of the company’s main office;
- Reason for dissolution;
- Liquidation period, contract liquidation procedures, payment of business debts;
- Plan to handle obligations arising from the employment contract;
- Full name and signature of the private enterprise owner, company owner, chairman of the board of members, and chairman of the board of directors.
➨ Step 2: Liquidate the company’s assets
- The owner of a private enterprise, the board of members or the company owner, or the board of directors (depending on the type of enterprise) directly organizes the liquidation of the enterprise’s assets, except in cases where the charter stipulates the establishment of a separate liquidation organization.
➨ Step 3: Send documents to the Department of Planning and Investment, tax authorities, and employees in the enterprise.
- From the date of approval, the resolution, decision on dissolution and meeting minutes must be sent to the business registration authority, the competent tax authority and employees of the enterprise within 7 working days. The resolution and decision on dissolution of the company must be posted on the National Business Registration Information Portal and must be publicly posted at the head office as well as branches and representative offices of the enterprise;
- In case the enterprise still has unpaid financial obligations, it must send along with the resolution, dissolution decision and debt settlement plan to the creditors, to the persons with rights, obligations and related interests;
- Immediately after receiving the resolution or decision to dissolve the enterprise, the competent business registration authority must notify the status of the enterprise undergoing dissolution procedures on the National Business Registration Information Portal.
➨ Step 4: Close tax code and resolve related issues
- The company will contact the tax authority in charge of the company to carry out the procedure of closing the tax code. During the process of closing the tax code, the company also needs to resolve issues of penalties, handling tax violations, and late tax payment – if any. Depending on the actual accounting records of the enterprise, the procedure of closing the tax code will take different amounts of time;
- During the process of tax code closing and tax settlement procedures, enterprises carry out procedures to report labor reduction and resolve employee benefits within the time limit prescribed in the Labor Code.
➨ Step 5: Submit application for dissolution registration
Within 5 working days from the date of full payment of all debts of the enterprise, the enterprise shall submit the enterprise dissolution registration dossier to the Business Registration Office where the enterprise has its main office.
➨ Step 6: Return the company seal
In case the company uses a seal issued by the police agency, the company is responsible for completing procedures to return the seal and the seal sample registration certificate to the police agency in charge according to regulations when completing dissolution procedures.
>> See more: Procedures for dissolving companies that have arisen and have not arisen.
2. Cases of compulsory dissolution
For enterprises whose business registration certificates are revoked or are forced to dissolve by court decision, the procedure for dissolving a foreign-invested company is carried out in the following steps:
➨ Step 1 : The competent business registration authority must notify the status of the enterprise undergoing dissolution procedures.
In parallel with the decision to revoke the business registration certificate or immediately after receiving the dissolution decision of the People’s Court that has come into legal effect, the business registration authority must notify the status of the enterprise undergoing dissolution procedures on the National Business Registration Information Portal.
➨ Step 2: The enterprise convenes a meeting to decide on dissolution.
- From the date of receipt of the decision to revoke the business registration certificate or the decision of the People’s Court taking legal effect, within 10 days, the enterprise must convene a meeting to decide on dissolution;
- Next, the enterprise must send the resolution, decision on dissolution and a copy of the decision to revoke the business registration certificate or the decision of the People’s Court with legal effect to the business registration authority, the tax authority, the employees of the enterprise and must also be publicly posted at the head office, as well as the branches and representative offices of the enterprise;
- In cases where the law requires publication in newspapers, the resolution or decision to dissolve an enterprise must be published in at least one printed or electronic newspaper in three consecutive issues;
- In case the company still has unpaid financial obligations, it must also send along with the resolution, decision on dissolution of the enterprise, and plan to settle debts to creditors, people with related rights and obligations.
➨ Step 3: Close tax code and resolve related issues
- The company will contact the tax authority in charge of the company to carry out the procedure of closing the tax code. During the process of closing the tax code, the company also needs to resolve issues of penalties, handling tax violations, and late tax payment – if any. Depending on the actual accounting records of the enterprise, the procedure of closing the tax code will take different amounts of time;
- During the process of tax code closing and tax settlement procedures, enterprises carry out procedures to report labor reduction and resolve employee benefits within the time limit prescribed in the Labor Code.
➨ Step 4: Submit application for dissolution registration
From the date of full payment of the enterprise’s debts, within 5 working days, the enterprise shall submit the dossier for dissolution registration to the Business Registration Office where the enterprise has its main headquarters.
Note:
Before submitting the application for business dissolution, if the business has a business location, branch or representative office, it must first carry out the procedures to terminate the operations of these dependent units.
3. Expected time to complete business dissolution
After 180 days from the date of sending the dissolution decision to the Department of Planning and Investment, if there is no objection from the parties and the enterprise has completed the above steps, within 5 working days the business registration authority will update the legal status of the enterprise on the National Database on Business Registration.
Procedures and documents for dissolving FDI enterprises with investment certificates
In addition to the steps that need to be taken when dissolving an FDI company without an investment certificate as above, the procedure for dissolving an FDI company with an investment certificate requires additional procedures to terminate the investment project.
Termination of investment project activities is carried out according to the following procedures:
- In case the company decides to terminate the investment project, the investor shall send the decision to terminate the investment project to the investment registration agency within 15 days from the date of the decision to terminate, together with the investment registration certificate;
- In case the company terminates the investment project according to the conditions stipulated in the contract, charter or the investment project expires, the investor shall notify and return the investment registration certificate to the investment registration agency within 15 days from the date of termination of the investment project, together with a copy of the document recording the termination of the investment project. The investment registration agency shall notify the relevant agencies of the termination of the investment project.
Some frequently asked questions about FDI enterprise dissolution procedures
1. What documents must be submitted to the business registration authority to dissolve an FDI enterprise?
The dossier for dissolving an FDI enterprise includes the following documents:
- Notice in the prescribed form on enterprise dissolution;
- Report on liquidation of enterprise assets; list of creditors and paid debts, including payment of all tax debts and insurance debts including social insurance, health insurance and unemployment insurance for employees after the decision to dissolve the enterprise (if any).
2. How long does it actually take to complete the procedures for dissolving an FDI enterprise?
The actual time to complete the dissolution procedure depends on the actual tax issues that arise for each company, which will vary.
3. How long does it take for a foreign invested company to be dissolved?
Currently, the Enterprise Law, Investment Law and related guiding documents do not stipulate how long from the time of establishment a company has the right to dissolve. When a company falls into the cases of enterprise dissolution according to the law, it can proceed with dissolution procedures.
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