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STEPS TO DISSOLVE FDI ENTERPRISES
In the challenging international market, foreign direct investment enterprises sometimes face major fluctuations and difficult decisions on business strategy. The dissolution of FDI enterprises is a difficult decision after careful consideration and thought. The process of dissolution is not only the closure of a project, an enterprise, but also a “breakup” of the foreign investor and the market in which he or she has entered. Sometimes, the decision to dissolve comes from changing the strategy of the business, focusing on another market or perhaps restructuring the business. It is also possible that the cause of the dissolution of the enterprise is the business situation or the policies of the state. In the following, Siglaw would like to share an overview of the steps in the process of dissolving FDI enterprises in accordance with Vietnamese law.
- Cases of dissolution of FDI enterprises
Foreign Direct Investment (FDI) enterprises are enterprises with direct investment capital from foreign individuals and organizations in Vietnam. Due to foreign factors, the establishment and application for investment certificates are carried out very strictly because of related factors. Similarly, when an FDI enterprise wishes to dissolve, it must fall into one of the following cases as prescribed in Article 207 of the Enterprise Law 2020:
- When the operation term stated in the company’s charter has expired without a decision on extension;
- According to resolutions, decisions of the company owner or the general meeting of company shareholders;
- When the company no longer meets the minimum number of members within 06 consecutive months without carrying out procedures for changing the type of enterprise;
- Enterprise Registration Certificate shall be revoked unless otherwise provided for by the Law on Tax Administration.
- Steps to dissolve FDI enterprises
- Termination of investment projects and payment of investment registration certificates
This is the first step to the dissolution of a foreign-invested enterprise. Within 15 days from the date of issuance of the dissolution decision, the investor shall prepare a dossier of termination of the investment project, including:
- The Owner’s decision on the termination of the investment project;
- Notice of termination of investment projects;
- Investment registration certificate (original);
- Power of attorney in case the Investor authorizes another individual/organization to submit the application.
After fully preparing the above dossier, the investor brings it to the Department of Planning and Investment where the FDI enterprise is located to submit.
- Public disclosure of dissolution information
Within 7 working days from the date of approval of the dissolution decision, the dissolution decision and meeting minutes of the owner/shareholder of the FDI company must be sent to the business registration authority; The agency and the workers in the business so that they catch it in time. At the same time, FDI enterprises must post the dissolution decision on the National Business Registration Portal and must be publicly posted at the head office, branches and representative offices of the enterprise.
- Notice of invalidation of the tax code.
In order to dissolve an FDI enterprise, an enterprise needs to fulfill all tax obligations to the law and only when fulfilling its tax obligations, the enterprise can notify the termination of the tax code validity at the tax administration. A dossier of notice of invalidation of the tax code includes:
- A written confirmation of the completion of tax obligations for import and export activities of the General Department of Vietnam Customs, for enterprises engaged in import and export activities;
- Written request for tax finalization;
- Letter of the enterprise requesting tax finalization;
- A written request confirming the fulfillment of tax payment obligations;
- Notice of enterprise dissolution;
- Notice of announcement of dissolution of the enterprise;
- Decision/resolution on business dissolution of the owner of a limited liability company or resolution/decision of the General Meeting of Shareholders of a joint-stock company and a copy of the meeting minutes;
- Power of attorney in case the enterprise authorizes another individual/organization to submit on its behalf.
After preparing a complete dossier, the enterprise submits the dossier at the Tax Department / Tax Department where the enterprise is located. After about 45 working days from the date of submission of a complete and valid dossier, the tax administration agency will issue a decision to terminate the tax code of the FDI enterprise.
- Registration of dissolution and return of the enterprise registration certificate
Finally, in order to complete the dissolution of an FDI enterprise, an enterprise needs to submit a set of dissolution registration dossiers to the Business Registration Office, including:
- Notice of enterprise dissolution according to the form of Appendix II-22 of Circular No. 01/2021/TT-BKHDT;
- Report on liquidation of enterprise assets;
- List of creditors and paid debts, including payment of all tax debts and social insurance contributions (if any);
- List of employees after deciding to dissolve the enterprise;
- Seal and seal sample certificate (if any);
- Certificate of business registration;
- Power of attorney in case the enterprise authorizes another individual/organization to submit the application.
After preparing all the above documents, the enterprise brings it to the Business Registration Office where the company is located. If the application is valid, the Business Registration Office will approve the application within about 180 days from the receipt of the dissolution decision from the enterprise.
In addition, in order to effectively apply the Government’s regulations on the implementation of administrative procedures in the electronic environment in Decree No. 45/2020/ND-CP dated April 8, 2020, as well as create conditions for enterprises, especially FDI enterprises, to enhance transparency in handling administrative procedures, saving costs and time for parties, FDI enterprises can apply online through the electronic network environment at: https://dangkyquamang.dkkd.gov.vn/.
The process of dissolving an FDI enterprise is not simply terminating an investment project but also letting the enterprise restructure to adapt to an increasingly competitive business environment. However, to ensure that the dissolution process is smooth and transparent, enterprises must make the right decisions from polling shareholders, company owners, asset management, and settling tax and legal obligations. Every step in the process requires caution to ensure that the business not only leaves the market peacefully, but also leaves a positive mark on the business community.
Above are our sharing about “Steps to dissolve FDI enterprises”. If you still have any questions about the dissolution of enterprises, especially foreign-invested enterprises, please contact Siglaw for the most accurate, effective and professional advice.
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