Can an enterprise that has dissolution decision self-terminate effective contracts in Vietnam?

Can an enterprise that has dissolution decision self-terminate effective contracts in Vietnam?

Pursuant to Article 211 of the Enterprise Law 2020 stipulates actions prohibited from the issuance date of the dissolution decision as follows:

1. From the issuance date of the dissolution decision, the enterprise and its executives are prohibited from the following actions:

a) Concealing, disguising assets;

b) Denying or reducing the creditors’ claims to the debts;

c) Convert unsecured debts into debts secured with the enterprise’s assets;

d) Concluding new contracts, except for dissolving the enterprise;

dd) Pledging, donating, leasing out assets;

e) Terminating effective contracts;

g) Raising capital in any shape or form.

2. The persons who commit the violations mentioned in Clause 1of this Article, depending on their nature and seriousness, will be held liable to administrative penalties or criminal prosecution and pay damages.

Thus, when an enterprise has a dissolution decision, it is not allowed to terminate the performance of an effective contract but still have to perform it. In case the enterprise terminates the contract performance by itself and violates or causes damage, the enterprise will be held liable to administrative penalties or criminal prosecution and pay damages according to the provisions of law in Vietnam.

What is duration for submitting the application for dissolution after the day on which the enterprise’s debts are fully paid in Vietnam?

According to Article 208 of the Enterprise Law 2020, dissolution procedures are as follows:

Enterprise dissolution in the cases specified in Points a, b and c Clause 1 Article 207 of this Law shall be carried out as follows:

1. A resolution or decision on the dissolution is issued. Such a resolution or decision shall contain the following information:

a) The enterprise’s name and headquarters address;

b) Reasons for dissolution;

c) Time limit and procedures for finalization of contracts and payment of the enterprise’s debts;

d) Plan for settlement of obligations under employment contracts;

dd) Full name and signature of the owner of the sole proprietorship, the company’s owner, the President of the Board of Members, the President of the Board of Directors;

2. The owner of the sole proprietorship, the Board of Members or the owner, the Board of Directors directly organizes the liquidation of the enterprise’s assets, unless the company's charter requires establishment of a separate liquidation organization;

3. Within 07 working days from the ratification date, the resolution or decision on dissolution and the minutes of the meeting shall be sent to the business registration authority, tax authority and the enterprise’s employees. The resolution or decision shall be posted on the National Enterprise Registration Portal, displayed at the enterprise’s headquarters, branches and representative offices.

In case the enterprise still has unpaid debts, the resolution or decision and the debt payment plan shall be sent to the creditors and persons with related rights, obligations and interest. The debt payment plan shall contain the creditors’ names, debts, repayment time, location and method; method and time limit for settling creditors’ complaints;

4. The business registration authority shall post a notification that an enterprise is undergoing dissolution, the dissolution resolution or decision and debt payment plan (if any) on the National Enterprise Registration Portal right after the resolution or decision is received (if any);

5. An enterprise’s debts shall be paid in the following order of priority:

a) Unpaid salaries, severance pay, social insurance, health insurance, unemployment insurance premiums and other benefits of employees under the collective bargaining agreement and concluded employment contracts;

b) Tax debts;

c) Other debts;

6. After the dissolution costs and debts have been fully paid, the remainder shall be divided among the owner, members/partners, shareholders in proportion to their stakes/shares;

7. The enterprise’s legal representative shall submit the application for dissolution to the business registration authority within 05 working days from the day on which the enterprise’s debts are fully paid;

8. After 180 days from the receipt of the dissolution resolution or decision mentioned in Clause 3 of this Article without further comments from the enterprise or written objections from relevant parties, or within 05 working days from the receipt of the application for dissolution, the business registration authority shall update the enterprise’s status on the national enterprise registration database;

9. The Government shall elaborate the procedures for enterprise dissolution.

According to this Article, after the day on which the enterprise’s debts are fully paid, the enterprise’s legal representative shall send application for dissolution to the business registration authority within 05 working days in Vietnam.

What does application for dissolution in Vietnam comprise?

Article 210 of the Law on Enterprises 2020 stipulates that application for dissolution is as follows:

1. An application for dissolution of an enterprise shall consist of:

a) The notification of the enterprise’s dissolution;

b) The report on liquidation of the enterprise’s assets; list of creditors and paid debts, including tax debts, social insurance, health insurance, unemployment insurance of employees after the dissolution decision is issued (if any).

2. Members of the Board of Directors (for joint stock companies), members of the Board of Members (for limited liability companies), the owner (for sole proprietorships), the Director/General Director, general partners and legal representatives shall be responsible for the accuracy and truthfulness of the application.

3. In case the application contains inaccurate or false information, the persons specified in Clause 2 of this Article shall jointly provide the outstanding employees’ benefits, taxes and other debts and bear personal responsibility for the consequences that occur within 05 years from the day on which the application is submitted to the business registration authority.

Thus, application for dissolution includes the documents specified above in Vietnam.

Best Regards!