PROCEDURES FOR ENTERPRISE DISSOLUTION 2020
The year 2020 indeed an unlucky year for the business activities of many businesses because of the severe impact of the Covid-19 pandemic. During this time, many companies have been struggling in trading activities, leading to stagnation and substantial losses. Because of the long period of the epidemic, new businesses haven’t a stable economy and suffer too much damage, they want to withdraw from the market. Meanwhile, the enterprise will have to pay obligations between its members, the relationship between the business and other entities, including customers, partners, employees, and State management agencies and carrying out procedures for enterprise dissolution.
Business dissolution differs from business bankruptcy in that the enterprise is still able to pay off its obligations but is no longer able to continue doing business. In contrast, business bankruptcy is the complete loss of solvency.
Understand the needs of clients, Nguyen va Cong su Law Firm, and a team of long-time, experienced lawyers offer the following Business Dissolution procedures for customers to know, comply with legal provisions, avoid risks, or breaches.
* For the case where the enterprise performs “voluntary dissolution”:
Step 1: Approve the decision to dissolve the company:
To be able to conduct the dissolution of enterprises, first of all, enterprises need to hold a meeting to pass the dissolution decision. Accordingly, the dissolution must be approved by the owner for a one-member limited liability company by the Members’ Council for a limited liability company with two or more members, General Assembly of Shareholders for joint-stock companies, and general partners for partnerships.
This decision shows the unanimity of members on issues related to the reasons for dissolution, deadline, and procedures for contract liquidation and debt payment, plan to handle obligations arising from labor contracts, and the establishment of a liquidation team.
The decision to dissolve the company specifies the following:
– Enterprise information: Name, address of the head office, tax code, legal representative of the enterprise;
– Clearly state the reason for dissolution;
– Within six months from the date of approval of the dissolution decision, the enterprise must carry out procedures for liquidating the contract and the enterprise’s debts.
– Provide a solution to all obligations arising in the labor settlement process;
Step 2: Publicly announce the dissolution decision:
After the dissolution decision is passed, the enterprise must notify the persons with rights and interests related to the dissolution of the enterprise of the dissolution decision.
In case, the enterprise has not yet paid for its financial obligations, it must send a notice enclosed with the “dissolution decision” and a written proposal of a “settlement plan” to the person with related interests and obligations. , and creditors.
The notice content details the creditor information (name, address, debit amount, payment time limit, debt payment location, and method of payment). This notice must specify conditions for creditors’ complaints when the enterprise does not comply with the content of the notice.
Step 3: Liquidate assets and pay all debts of the company:
Clause 2 and Clause 5 Article 202 of the Law on Enterprises 2014 stipulates the person who liquidates assets and order of debt payment. Unless a company has established a debt liquidation organizing committee, the liquidation of assets of the enterprise will do by the owner of the private enterprise, the company owner, or the members’ council or the board of directors of the Joint Stock Company.
The priority order for debt payment is as follows:
(1) Salary debts, severance pay, social insurance by the law and other interests of the employee as specified in the collective labor agreement or the signed labor contract ;
(2) Tax debt;
(3) Other liabilities.
After all debts and dissolution expenses have been paid, the remaining assets belong to the private enterprise owner, members, shareholders, or owners of the company.
According to Point c, Clause 1, Article 202 of the Law on Enterprises 2014, the term of contract liquidation must not exceed six months from the date of approval of the dissolution decision.
The time above is only suitable for small-sized businesses, without complicated transaction relationships, and highly liquid assets. For companies with large scale or many assets (such as real estate), which need a long time to liquidate and pay debts, this time may not be enough to settle all contracts and pay the public in debt.
The repayment of debts is very complicated because it is necessary to set up an appropriate sequence to ensure the rights and interests of the people involved.
Step 4: Submit dissolution documents:
According to Clause 4 Article 203 of the 2014 Law on Enterprises, the legal representative of the enterprise submits the dissolution dossier to the business registration authority within five working days from the date of full payment a debt of the business. An enterprise dissolution dossier is also specified in Article 204 of this Law.
Step 5: Update the legal status of the enterprise in the National Business Registration Database:
Clause 8, Article 202 of the 2014 Law on Enterprises stipulates that the dissolution of an enterprise is carried out by two methods:
-In case of dissolution, according to the dossier, Article 59 of Decree No. 78/2015 / ND-CP stipulates that the business registration agency is responsible for sending the dissolution dossier of the enterprise to the tax agency. Within two working days after receiving information from the business registration agency, the tax office shall send its opinion on the dissolution of the enterprise to the business registration office.
Within five working days after receiving the dissolution dossier, the business registration agency shall update the enterprise’s legal status in the database system.
-In case of automatic dissolution, within 180 days from the date of notification of the status of the enterprise dissolution without a written objection from the related party, the business registration authority will update the legal status—business management in the database system.
Besides, the Law on Enterprises 2014 also supplements regulations on the dissolution of enterprises in case of revocation of the Certificate of Business registration or by a decision of the Court.
* For the case where the enterprise performs “compulsory dissolution”:
Step 1: The business registration authority shall notify the status of the enterprise undergoing dissolution procedures on the National Business Registration Portal:
The business registration authority is authorized to update information on the status of an enterprise that is carrying out dissolution procedures on the national register information system. Simultaneously with the issuance of the decision to revoke the enterprise registration certificate right after receiving the effective dissolution decision of the Court. The notice must also be posted with the decision to rescind the enterprise registration certificate or the court decision.
In cases where a newspaper is required, the enterprise must post the dissolution decision on at least one written or electronic paper in three consecutive issues.
In case, the enterprise has not yet fully paid off its financial obligations. It must send a notice enclosed with the “dissolution decision” and a written proposal of a detailed “settlement plan” to the person who has interests and rights: the related departments, and creditors.
The content of the notice shall specify the details of the creditor (name, address, debit amount, repayment term, place of debt payment, and method of payment of such debt). In this notice, there must be additional provisions on the creditors’ complaint conditions when the enterprise does not comply with the content of the announcement.
Step 3: Organize the liquidation of assets and payment of debts
Step 4: Submit a request for business dissolution
Step 5: The Business Registration Authority updates the legal status of the enterprise in the National Business Registration Database
The execution order and method in steps 3, 4, 5 are similar to the case of voluntary dissolution.
The above is the advice of Nguyen va Cong su on the Enterprise Dissolution procedure in 2020. If you are unclear or need other legal assistance, please contact the Free Enterprise Legal Advice switchboard by Nguyen va Cong su.
We hope to receive trust and cooperation from our customers.