ISSUES TO CONSIDER WHEN DISSOLVING FOREIGN-INVESTED ENTERPRISES

ISSUES TO CONSIDER WHEN DISSOLVING FOREIGN-INVESTED ENTERPRISES

In the context of increasingly deep international integration, Vietnam is attracting a large amount of foreign investment (FDI) from multinational enterprises. However, besides the new establishment, some old FDI enterprises will also have to dissolve for many different reasons. Therefore, compliance with legal regulations when dissolving foreign-invested enterprises is an issue that needs attention.

This article will provide general notes on dissolution of foreign-invested enterprises according to the Enterprise Law 2020. This promises to be useful information for both businesses and state management agencies.

In June 2020, the National Assembly passed the new Enterprise Law, effective from January 1, 2021 and replacing the 2014 Enterprise Law. The 2020 Enterprise Law clearly stipulates the order and dissolution procedures for enterprises with foreign investment. Therefore, FDI enterprises need to understand the new regulations to dissolve in the right order, ensuring the rights of relevant parties.

• Regarding dissolution procedures for foreign-invested enterprises

• FDI enterprises must prepare dissolution documents including dissolution decision, meeting minutes and resolution of the company owner on dissolution.
• Submit documents to the Business Registration Office where the enterprise is headquartered. The time limit for processing dissolution documents is 03 working days from receipt of complete and valid documents.
• After the dissolution decision is made, the enterprise must post a notice of dissolution on the National Business Registration Portal

• Pay debts and financial obligations

• FDI enterprises must fully pay all debts and financial obligations before dissolution.
• Debts include: taxes, fees, charges, social insurance, health insurance, unemployment insurance.
• Enterprises must also liquidate labor contracts and other economic contracts.

• Explanation document for overseas investment capital

• At least 90 days before dissolution, the enterprise must report to the investment capital management agency on the plan to return capital and profits abroad.
• Once approved, the foreign investor must complete procedures for returning investment capital to the country of origin. Specifically, declare taxes, pay taxes and return capital and profits to the country according to regulations.

• Plan for using employees and assets

• FDI enterprises are responsible for making plans for labor use after dissolution, ensuring workers’ rights.
• In case the enterprise is dissolved without a plan to employ workers, employees will be paid all benefits such as salary, severance pay, social insurance, health insurance, and unemployment insurance.
• The remaining assets after dissolution are divided according to the capital contribution ratio

• Delete the name of a foreign-invested enterprise on the National Information Portal

After completing debt payment procedures, financial and labor obligations, FDI enterprises carry out procedures to request name deletion on the National Enterprise Information Portal: https://dangkylanhdoanh.gov.vn/vn /Pages/Trangchu.aspx

Thus, when dissolving FDI enterprises according to the Enterprise Law 2020, businesses need to comply with regulations on procedures, payment of debts and financial obligations, handling of personnel and assets. This contributes to ensuring the legal rights of the State, workers and foreign investors

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