The legal consequences of business dissolution are things that businesses need to pay attention to when dissolving. It can be said that the marketplace is the battlefield. After the company has existed and operated in the market for a while, for many different subjective and objective reasons, the company cannot continue doing business. And leading to dissolution is inevitable. However, in addition to dissolution procedures and company dissolution documents, there are many other things worth paying attention to. Therefore, in the article below, we will take a closer look at the legal consequences of company dissolution.

1. What is enterprise dissolution?

Company dissolution is the termination of the existence of a company that no longer exists or has absolutely no right to exist. Therefore, traders must carry out legal procedures at the commercial registration agency to terminate the company’s legal status and accompanying rights and obligations.

According to Article 207 of the Enterprise Law 2020, the following cases of dissolution are regulated:

• An enterprise can be dissolved in the following cases:
• The term expires according to the company’s regulations without a decision to extend;
• According to the decisions and decisions of the company owner, for limited liability companies, according to the decisions and decisions of the board of shareholders for joint stock companies
• The company no longer has the minimum number of members as prescribed by the Law on Enterprises 2020 for 06 consecutive months without carrying out procedures to convert the company type;
• The registration certificate is declared invalid, unless otherwise provided by the Tax Administration Law.

In addition, according to the provisions of Article 93 of the Civil Code 2015, legal entities are dissolved in the following cases:

• According to the provisions of the charter;
• According to the decision of the competent authority;
• Expiration of the operating term specified in the charter or decision of a competent state agency;
• Other cases prescribed by law.

After the decision to terminate operations, the company is not allowed to do the following:

• Conceal or distribute assets;
• Waiver of right to collect or reduce;
• Convert unsecured debts into debts secured by company assets;
  enter into a new contract, except in the case of termination of the company’s operations;
• Pledge, mortgage, donate or lease real estate;
• Terminate current contract;
• Mobilizing capital in all forms: Depending on the nature and severity of the violation, the violator may be subject to administrative sanctions or criminal prosecution; If damage has been caused, compensation must be made.

2. Conditions for enterprise dissolution in 2024

The company can only be dissolved if the following conditions are met:

• Ensure payment of all debts and other real estate;
• Disputes are not resolved in court or arbitration at this time.
• The relevant director and the company whose registration certificate is revoked must be jointly responsible for the company’s debts.

3. Process for dissolving enterprises in 2024

So that the dissolution goes smoothly and saves time. Before applying for dissolution, businesses should know what they need to prepare and be proactive enough to resolve issues to their advantage.

3.1 Business dissolution records in 2024

Enterprise dissolution documents include the following documents:

• Notice of dissolution;
• Declaration of asset liquidation status; List of creditors and paid debts, including tax debt and social insurance, health insurance, and unemployment insurance payments of employees after the decision to close the business (if any) .

Member of the board of directors of a joint stock company, member of the board of members of a joint stock company, company owner, owner of a private company, manager or executive director, general partner, The legal representative is responsible for the accuracy of the records.

If the records are inaccurate or falsified, the above-mentioned persons shall be jointly responsible for payment of unpaid workers’ compensation, unpaid taxes and other unpaid debts, and shall be liable to Law on consequences within 5 years from the date of filing the dissolution dossier.

3.2 Procedures for dissolution of enterprises in 2024

When dissolving a business, it is important to follow the following steps correctly to avoid errors as well as to make the business dissolution process as quick and complete as possible.

In case of registering dissolution directly or via postal service

The dissolution of the company in the cases specified in Points a, b and c, Clause 1, Article 217 of the Enterprise Law is carried out as follows:

Step 1: Report dissolution to the company registration agency where the company is headquartered

The company must send a notice of termination to the business registration office within 07 working days from the date of dissolution decision.

During the registration process, the documents specified in Article 70 of Decree 01/2021/ND-CP must be published within 01 working day from the date of receipt of notice of termination of the company’s operations and must be published. clearly state the status of the operating company and notify the operating status on the national information portal on business registration, change the legal status of companies in the database of the Commercial Register . To fulfill tax payment obligations, businesses carry out procedures with tax authorities according to the provisions of the Law on Tax Administration.

Step 2: After paying all debts, the company submits dissolution documents to the business registration office where its head office is located.

• Within 05 working days from the date of payment of all debts of the company, the company must submit a dissolution document.
• Before submitting the dossier to register the dissolution of the company, the company must carry out procedures to terminate the operations of the branch, representative office, or corporate office at the business registration office where the headquarters or office is located.
• After receiving the company’s request for dissolution, the Registration Authority sends information about the company’s liquidation to the tax authority. Within 02 working days from the date of receiving information from the business registration agency, the tax administration agency must send a written confirmation to the business registration agency on the completion of the company’s tax payment obligation. ty. The Business Registration Office must change the company’s legal status to dissolution status in the National Business Registration Database within 05 working days from the date of receipt of the request for dissolution registration. company. Do not receive a refusal letter from the tax authority and a notice of dissolution of the company.
• After 180 days from the date the Business Registration Office receives the notice attached to the decision or the decision to dissolve the company, without receiving the dissolution registration dossier and the relevant objections, the Business Registration Office replaces the company. Change the company’s legal status in the company’s business registration database to dissolved when there is a written objection from the relevant person, send information about the dissolution of the company to tax authority, and issue a notice of dissolution within 03 days from the end of the term.

In case a business registers electronically using public digital signatures

• Registrants submit information, upload electronic documents, look up business registration documents via the electronic information network and pay business registration fees and charges according to the procedures of the National Information Portal on registration. Business registration (https://dangkytinhdoanh.gov.vn).
• After submitting the registration request, the registrant receives a registration receipt via the electronic information network.
• If the dossier is suitable for business registration, the Registration Authority issues an Enterprise Certificate and notifies the business of the registration. In case the dossier does not meet the conditions for business registration, the Registration Authority will send a notice to the business via the Electronic Information Portal requesting to change and complete the dossier.

In case a business registers electronically using the Business Registration Account

• The registrant uses the business registration account to send information, upload electronic records, authenticate business registration documents via electronic data network and pay business registration fees and charges according to the process. of the National Business Registration Portal (https://dangkytinhdoanh.gov.vn). In case the power of attorney authorizes the implementation of business registration operations via the electronic information network through the business registration account, the power of attorney must include contact information of the authorized person to verify the authorization. Submit registration documents via electronic information network.
• After submitting the registration application, the applicant will receive a Receipt of the company’s registration application via the electronic information network.
• The registration authority issues a business registration certificate to the company if the documents are valid and notifies the company of the registration. In case the dossier is not valid, the business registration office shall notify via electronic information network to the enterprise requesting to amend and supplement the dossier.

4. Note the legal consequences of business dissolution

The legal consequences of business dissolution are something that businesses need to consider when dissolving. When dissolving an enterprise, it is necessary to pay attention to the legal consequences to take measures to avoid violations or loss of the enterprise’s rights. Because dissolving a business is already a huge loss, so during the process of dissolving a business, you should do something to avoid more losses.

Status of the business

When an enterprise is dissolved voluntarily or forced to dissolve, the end result is that the enterprise’s name is deleted from the business registration book and its existence ceases.

Property obligations of the enterprise

Companies enter into liquidation to exit the market only after they have ensured that all debts have been paid and all assets have been completed. If a company cannot pay its overdue debt, it must be dissolved under bankruptcy law. Thus, it can be said that a company’s solvency is the deciding factor in whether the company withdraws from the market through dissolution or bankruptcy.

Some activities are strictly prohibited from the date of dissolution decision

The purpose of stipulating the above prohibited acts is to prevent the arising of additional rights and obligations that lead to the company’s ability to repay debt being weakened, and at the same time limit the dispersal and dispersal of assets. company’s products. of bonds. partners during operations that directly affect the legal rights and interests of neighboring communities.

Business management representative

Current law provides that termination does not include sanctions that restrict the commercial freedom of managers and directors.

Therefore, the manager and operator of a dissolved company can still establish and manage a new company. Companies that close after completing real estate can still move to other areas of operation if conditions permit.

5. Frequently asked questions about business dissolution

5.1 When dissolving a company, do we have to settle taxes?

Before a company sends final documents to the Business Registration Office, it must verify its tax audit and close its tax code.

5.2 Which agency handles company dissolution procedures?

Agencies include: Customs authorities; Tax authorities; Insurance agent; Business registration agency

5.3 Is it possible to establish a new company after dissolving the old company?

After dissolution of the legal entity/company, shareholders, employees and legal representatives have unlimited rights to establish a new company.

5.4 Will the company’s business license be revoked when dissolved?

According to the current working procedure, business/tax authorities will no longer revoke trade licenses if the company is dissolved.

5.5 Does dissolution take long?

Dissolving a company takes quite a lot of time because it involves many procedures with different authorities. Usually, the part that takes the most time is making the final settlement with the tax authorities, which can take several years to complete if you are not familiar with this work.

Above is a consulting article on “Legal consequences of business dissolution” by VIET MY LAW AND ACCOUNTING. If you still have questions about a certain issue and need an answer, please contact us for advice and support from our staff.