Dissolution of joint stock companies: Conditions and Procedure

Many enterprises choose dissolution when meeting difficult conditions in capital or production. And dissolution is considered the way that many owners choose to stop the enterprise’s operations that are not operating efficiently.  However, what should be done to dissolve the joint companies?

1. Conditions for dissolution of enterprises

In accordance with the regulations prescribed in Article 207, Law on Enterprise 2020, an enterprise shall be dissolved in the following cases:

- The operation duration stated in the company charter expires and no decision to extend such operation duration is issued;

Under the resolution or decision of the General Meeting of Shareholders;

- The company no longer satisfies the requirement on the minimum number of members for 6 consecutive months without carrying out enterprise transformation procedures;

-The enterprise has its enterprise registration certificate revoked (unless otherwise prescribed).

Also in accordance with Article 207, an enterprise may only be dissolved when it commits to fully pay debts and perform other property obligations and is not currently involved in the dispute resolution process at court or arbitration.

2. Dossier for dissolution of joint stock companies

In accordance with Article 210, Law on Enterprise 2020, an enterprise dissolution dossier must comprise:

- A notice of the enterprise dissolution;

- A report on the liquidation of the enterprise’s assets;

- List of creditors and paid debt amounts (including the paid outstanding tax amounts and social insurance, health insurance, and unemployment insurance premiums for employees, if any, after the dissolution of the enterprise is decided).

Members of the Board of Directors, for a joint stock company enterprise, must be responsible for the truthfulness and accuracy of the enterprise dissolution dossier.

If the information in the enterprise dissolution dossier is inaccurate or documents in the dossier are forged, the members must be liable for: Settlement of the unsettled interests of employees, payment of outstanding tax amounts, and other debts.

3. Order and procedures for dissolution of joint stock companies

3.1. Procedures for dissolution of joint stock companies under the Resolutions, Decisions of the General Meeting of Shareholders

The procedure for dissolution of joint stock companies is prescribed in Article 208, Law on Enterprise 2020, and Article 70, Decree No. 01/2021/ND-CP. In particulars:

Step 01: Inform the dissolution of enterprises the business registration agency

- The enterprise shall send the notice on dissolution the to the business registration agency of the locality where the enterprise’s head office is based within 07 working days from the approval date of the Resolution and Decision of dissolution.

The dossier must have all the major contents as follows:

+ A notice of the enterprise dissolution;

+ Debt settlement plan (if any);

- Within 01 working day after receiving the notice of the dissolution of the enterprise, the business registration agency must:

+ Post the decision and notify the enterprise’s status of currently carrying out dissolution procedures on the National Business Registration Portal;

+ Update information about the legal status of the enterprises in the national business registration database when transferring the status of processing dissolution procedure.

+ Submit information on the dissolution to the tax agency. 

- The enterprises must fulfill their tax obligations

Step 02: Full payment of its debts and other property obligations

Step 03: Termination of operation of branches, representative offices, and business locations of enterprises at the business registration agency of the locality where the enterprise’s head office, representative office, or business locations are based. 

Step 04: Submit the dossier for dissolution to the business registration agency

- The enterprise shall send the dossier for dissolution to the business registration agency of the locality where the enterprise’s head office is based within 05 working days from the date of fulfilling all the debts and property obligations.

- After receiving the dossier for dissolution, the business registration department shall submit the information of that enterprise to the tax agency. 

- Tax agency submits the opinion on fulfilling tax obligations to the business registration department within 02 working days after receiving the information from the business registration department. 

- Within 5 working days after receiving the dissolution dossier, the business registration agency shall update information about the legal status of the enterprise in the national business registration database to the status of dissolution (if not receive a refusal from the tax agencies).

- A notice of the enterprise dissolution.

3.2. Procedure for dissolution of joint stock companies for the revocation of enterprise registration certificates or under a court’s ruling

The procedure for dissolution of joint stock companies is prescribed in Article 209, Law on Enterprise 2020, and Article 71, Decree No. 01/2021/ND-CP. In particulars:

Step 01: Post the Decision and Notice of the current situation that the enterprise is processing the procedure for dissolution.

Within 01 working day from issuing a decision to revoke the enterprise registration certificate or receiving the effective court’s ruling, the business registration department shall post the decision and inform the enterprise's dissolution conditions on the National Business Registration Portal on business registration.

At the same time, change the legal status of the enterprise in the national business registration database to the status of processing dissolution procedure and submit this information to the tax agency.

Step 02: Full payment of its debts and other property obligations of the enterprise

Step 03: Submit the dossier for dissolution of the enterprise

The enterprise shall send the dossier for dissolution to the business registration agency of the locality where the enterprise’s head office is based within 05 working days from the date of fulfilling all the debts and property obligations.

And then, the dossier submission for dissolution to the business registration shall be processed with Step 4 in section 3.1 for the dissolution of joint stock companies under the Resolution and Decision of the General Meeting of Shareholders.

Here are the guidelines for the procedure for the dissolution of joint stock companies.