Last year, GDP growth in Vietnam slowed to 2.58 percent. You may know a business owner whose company was fiscally unaffected by the pandemic, but unfortunately, the company closed down. So how do you begin the legal process of closing your company?
While the process is fairly straightforward, the documentation required can be extensive. Read on as we guide you on the deregistration of a Vietnam company.
Signs Your Business May Need Closing
The most obvious sign your business may need to close is low revenue and sales. If you have been struggling to boost these in the past few months or even before the pandemic, it may be time to shut.
This lack of turnover can manifest in delayed bill payments, another reason for the closure. Once you lose trust from vendors it becomes harder to do business in Vietnam.
Primary Factors for Deregistration
A company may be dissolved for several reasons. This is applicable if its specified operational period lapses without extension as per the charter, at the owner’s decision for private enterprises, by unanimous agreement of unlimited liability partners in partnerships, by the Members’ Council or owner for limited liability companies, or at the General Meeting of Shareholders for shareholding companies. Additionally, dissolution can occur if the company fails to maintain the minimum required number of members for six consecutive months or if its business registration certificate is revoked. Typically, the dissolution process takes approximately four to six months to complete.
Conditions For Closure
Termination of a business in Vietnam can only take on the meeting of certain conditions. The first is that the owner, partners, board members, or shareholders (depending on how the company operates) must first make a collective decision to dissolve the company.
Other conditions may be that the operational period in the initial charter has expired without an extension. An annulment of the business registration certificate or being unable to retain the minimum number of members are valid conditions.
The company must settle all debts and liabilities. No court disputes or arbitration tribunals must be taking place either if a company wants to dissolve.
Steps Involved When Deregistering a Company
When deciding to dissolve the company, the owner must issue a dissolution statement containing essential details: the company name, head office address, business registration number, reasons for dissolution, and a deadline (within six months of dissolution) for liquidating contracts and loans. Additionally, solutions for obligations arising from labor contracts must be provided. This document must be signed and distributed to relevant agencies, creditors, individuals with rights or obligations related to the company, and all employees.
To complete the company closure, the investor must settle all tax and financial obligations with the government to close the company’s tax code, if applicable. They must also settle personal income tax, social insurance, and health insurance for all employees, obtaining confirmation from relevant authorities.
Further tasks include liquidating employment contracts, office leases, and supplier agreements, as well as clearing all outstanding debts. Within seven working days of approval, the dissolution resolution must be sent to licensing authorities, creditors, individuals with vested interests, and employees and publicly posted at the company’s head office and branches.
Termination Of Business In Vietnam Procedure
The procedure you need to follow when you close a company in Vietnam has a few stages. However, the documentation required for each stage can make it extremely complex.
Your first step is an application to the Department of Planning and Investment. An extensive checklist is in the next section to help you collate the documents you need.
Termination of all investment projects must occur if the company has an investment registration certificate. Once approved by the department, the minutes of the dissolution meeting must go to the authorities. Publishing of this information will happen across several platforms including the National Business Registration Portal.
Following this, you need to fulfill your tax obligations. A registration regarding the dissolution of the company must take place and the enterprise registration certificate needs returning.
Tax Responsibilities
The first step only applies if the company had an import and export tax code. All taxes related to this need settling and an application should go to the Department of Customs. They will give certification to say that everything is now paid and destroy the code.
Once requested, the company needs to destroy any export or value-added tax invoices not yet issued. Overdue taxes should get paid at this point. To do this, you will need to submit the following:
- Dissolution decision minutes
- Annual financial report
- Notice confirming the invoice destruction
Within 10 days of this, the company tax code will close. A notification will be given shortly afterward.
Closing Accounts
If your company never opened a bank account in Vietnam, it must write a statement to confirm this. Any other bank accounts must need closing. The bank must provide official notification to say you have closed the account.
Deregistration Of A Vietnam Company Checklist
As a final step, you need to prepare a dossier which must go to the Department of Planning and Investment. This office has the task of lawfully dissolving your company. Items that must be in the collection of information are listed below.
- Original investment certificate for the company
- An independent auditors financial report for the latest year
- Minutes from the Board of Management meeting related to the company dissolution
- The decision and notice on the dissolution of the company
- A list of paid debts and creditors
- Asset liquidation meeting minutes
- A list of employees and their rights and benefits
- Confirmation of closed banks accounts
- Tax authority letter saying the company has fulfilled its financial obligations
- Social Insurance Department notification stating all payments are fulfilled
- General Department of Customs certification stating that the customs code has been closed and taxes have been paid
As you can see above, the procedure on how to close a company in Vietnam is extensive. When you have collated the above documents and submitted them the companies name will be deleted.
Starting the Process of Deregistration of Vietnam Company with Premia TNC’s Assistance
Now that you are ready to begin the deregistration process for your Vietnam company, it is crucial to discuss this with your fellow stakeholders. Gathering the necessary documentation is the next step. Fortunately, you will not have to navigate this complex process alone.
Premia TNC offers a comprehensive company dissolution service designed to ease the entire deregistration process for you. Our experts possess the skills needed to navigate the complexities involved, ensuring a straightforward and trouble-free experience. Contact us today to explore how our services can promptly settle your affairs and reduce any regulatory burdens.
