FDI Vietnam: Deregistration of a Foreign-Invested Limited Liability Company

Achieving long-term success is the ultimate goal for any business, but there are times when closing a company becomes the most strategic decision. For executives, understanding the responsibilities and procedures for company deregistration under Vietnamese law is crucial. This article focuses on the efficient winding up of a foreign-invested Limited Liability Company (LLC) in Vietnam, ensuring clarity and preparedness for the subsequent steps. In summary, the possible avenues for deregistering such a company include dissolution and bankruptcy.

Company dissolution

There are two types of dissolution in Vietnam: voluntary (initiated by the shareholder(s)’s decision), and mandatory (enforced under conditions, including insufficient membership, ERC revocation, or expiration of the operational term).[i] In which, ERC revocation occurs due to reasons such as non-operation for a year without notifying authorities, falsified registration information, the owner’s disqualification to establish the company, or a court decision.[ii]

Additionally, to dissolve, the Company must settle all debts, fulfill other financial obligations, and not be involved in any litigation or arbitration proceedings.[iii].

Regardless the type of dissolution, the process to dissolve a company in Vietnam is as follows:

Step 1: Announcing the dissolution the Company

To announce the dissolution of a company, the shareholder(s) shall submit a Decision of Dissolving the Company to competent authority.

The process of announcing dissolution of the Company shall be conducted as follows:

	Content
Dossier elements	Pursuant to Article 208, Law on Enterprise
Send to [iv]	Business Registration Office (BRO);Tax DepartmentCompany’ employeesPublished at the Company’s headquarters, branches, representative office, and outlets
Timeframes	Within 7 days of signing, send to recipients.BRO updates legal status to “undergoing dissolution” on the National Business Registration Portal and Database.[v]Opposition period: 180 days from Dossier submission.[vi]

Step 2: Settle debts, fulfill tax and financial obligations.

While settling outstanding financial obligations, the following payment order and priority shall be respected: (i) labor-related obligations: unpaid wages, retrenchment allowances, social insurance, health insurance; (ii) tax liabilities; (iii) other debts.[vii]

Simultaneously, the Company must also terminate all its contracts, dissolve branches, representative offices, business outlets (if any), close its bank account, and destroy its stamp.

Step 3: Submit Company Dissolving Dossier at competent authority

Within 05 days of settling all debts and obligations, the Company’s legal representative must submit a Dissolution Registration Dossier to the Business Registration Office.

	Content
Dossier elements	Pursuant to Article 208, Law on Enterprise
Recipient	Business Registration Office (BRO).
Estimated result time [viii]	05 working days, if the Decision is not opposed by any other relevant party (See: Step 1)
Result [ix]	Notification of the Company’s Dissolution issued by BROLegal status of the Company changed to “dissolved” on the National Business Registration Database.

Bankruptcy

Unlike dissolution, which is an administrative process, bankruptcy is a judicial process decided by a court. If an insolvent company cannot dissolve, it can file for bankruptcy. In which, insolvency means the company hasn’t paid its debts within 03 months of the due date, which is the basis for the court to declare the company bankrupt.[x]

A bankrupt company doesn’t have to pay all its remaining financial obligations. However, it must use all its assets to cover unpaid debts. The order of settling financial obligations is as same as in dissolution process.

The bankrupt procedure for a FDI LLC Company is as follows:[xi]

Dossier relevant to the bankruptcy declaration process for a company must comply with Vietnam’s laws on bankruptcy. Completion of bankruptcy procedures requires at least 120 working days as stipulated by law.[xii]

Conclusion

Navigating the deregistration process for a foreign-invested Limited Liability Company (LLC) in Vietnam requires a thorough understanding of the legal framework and procedural steps involved. Whether choosing the path of dissolution or bankruptcy, it is essential for company executives to be well-prepared and informed about their responsibilities. Dissolution, whether voluntary or mandatory, demands meticulous attention to debt settlement, financial obligations, and proper notification to relevant authorities. On the other hand, bankruptcy is a judicial process that provides an alternative when a company is insolvent and unable to dissolve through administrative means.

By following the outlined steps and adhering to Vietnamese regulations, executives can ensure a smooth and compliant winding up of their business operations.

At D’Andrea & Partners Legal Counsel, we have authored innovative publications that explore Vietnam’s economic and legal landscape. These resources are designed to provide foreign investors and businesses with practical guidance on operating in Vietnam. Our expertise includes offering tailored consultancy for closing a business presence in the country, ensuring a comprehensive understanding of the specific legal and economic context.

The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.

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[ii] Articles 17.2, 212, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[iii] Article 207, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[iv] Article 208.3, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[v]Article 208.4, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[vi] Article 208.8, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[vii] Article 208.5, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[viii] Article 208.8, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[ix] Article 208.8, Law on Enterprise (Law 59/2020/QH14, amended and supplemented by Law 03/2022/QH15).

[x] Article 4.1, Law on Bankrupt (Law 51/2014/ND-CP).

[xi] Chapter II – Chapter XII, Law on Bankrupt (Law 51/2014/ND-CP).

[xii] Articles 42.1, 67, 68, 75.1, 92.2, Law on Bankrupt (Law 51/2014/ND-CP).