Dissolution Of Partnership In Vietnam.docx

D. DISSOLUTION OF PARTNERSHIP IN VIETNAM I.

Definition of dissolution

Dissolution marks the end of the partnership relationship. It occurs when any partner discontinues his or her involvement in the partnership business or when there is any change in the partnership relationship.

II.

Cases of dissolution:

Under the Article 201 of the Law on Enterprise 2014, the cases of dissolution of partnerships in Vietnam are: Article 201. Cases of and conditions for dissolution: 1. A enterprise shall be dissolved in the following cases: a. The operation period written in the company’s charter expires without a decision on extension; b. The dissolution is decided by the owner of the sole proprietorship, by all general partners of the partnership, by the Board of members or owner of the limited liability company, or insurance the General Meeting of Shareholders of the joint-stock company; c. The company fails to maintain the minimum number of members prescribed by this Law for 06 consecutive months without following procedures for business conversion; d. The Certificate of Business registration is revoked. 2. The enterprise shall only be dissolved if all debts and liabilities can be settled and the enterprise is not involved in any dispute at a court or arbitral tribunal. Relevant managers and enterprises mentioned in Point

d Clause 1 of this Article are jointly responsible for the enterprise’s debts. 1. Voluntary dissolution: Voluntary dissolution is the case of dissolution when partners passedthe resolution that the existence of the partnership is terminated. This case takes place when when the period, if any, fixed for the duration of the company by the memorandum or articles expires, or the event, if any, occurs, on the occurencen of which the memorandum or articles provide that the company is to be dissolved, and the partnershave passed a resolution requiring the company to be dissolved voluntarily. 2. Compulsory dissolution: Compulsory dissolution is the case of dissolution a partnership that depends on the resolution to dissolve of the authorised institutions. Pursuant to Clause (c) and (d), Section 1, Law on Enterprise 2014, compulsory dissolution commences when the corporation is failure to meet the regulatory minimum number of members for six consecutive months, or the company’s enterprise registration certificate is revoked as the corporation has any breach during period of doing business. Pursuant to Clause (c),if the number of members in a partnership are less than 2 members and that corporation does or have any solution within a limited time provided for by law, the corporation is compulsory to dissolve. Pursuant to Clause (d), revoking the company’s enterprise registration certificate is a strict punishment that imposed on enterprises under those circumstances:

- Content stipulated in the application file for enterprise registration is false; - The enterprise is established by persons who are prohibited from establishing enterprises - The enterprise ceases its business activities for one year without notifying the business registration office and the tax office; - The enterprise fails to send reports to the business registration office within six months from the date of expiry of the period for sending reports or from the date of written demand; This is one of the most highly litigated area in a company. This kind of dissolution takes place where the company itself

has passed a special

resolution to be dissolved by the authorised institutions, but more commonly the reason for the presentation of a petition for such dissolution is due to the inability of the company to settle its debts. III.

Dissolution preparation and dissolution procedures:

1. Dissolution preparation: Before carrying out dissolution procedures, partnership needs to prepare the petition for enterprise dissolution. This petition contains these main content: - A notification of the enterprise dissolution; - A report on liquidation of the enterprise’s assets; a list of creditors and paid debts, including tax debts, outstanding social insurance contributions, and debts owed to employees after deciding the dissolution (if any); - The seal and seal certificate (if any); - The Certificate of Business registration. Next, general partners shall be responsible for the truthfulness and accuracy of the petition.

If the petition are not accurate or fraudulent, the persons mentioned in Clause 2 of this Article are jointly responsible for paying the unpaid debts, taxes, and unsettled employees’ benefits, and take personal responsibility for any consequence that ensue within 05 years from the day on which petition for dissolution is submitted to the business registration authority. 2.Dissolution procedures: a. Voluntary dissolution: Pursuant to Article 202, Law on Enterprise 2014, the dissolution in the cases mentioned in Point a, b and c, Clause 1 of Article 201 shall be carried out as follows: Firstly, the decision on dissolutionshall be ratified. And this decision must contain these basic information: - Name of enterprise and address of headquarter, - Reasons for dissolution, - The procedures for finalizing contracts and settling debts; the dealine for settling debts and finalizing contracts. The dealines must not exceed 6 months from the day on which the decision on dissolution is ratified, - Plans settlement of obligations derived from employment contracts, - Full name and signature of the enterprise’s legal representative. Secondly, the enterprise’s assest liquidation shall take place. The Board of members shall directly organize this assest liquidation, unless a separate liquidation organization must be established according to the company’s charter. Thirdly, the decision on dissolution and meeting minutes must be sent to the business registration authority, tax authority, and employees of the

enterprise; the decision on dissolution shall be posted on National Business Registration

Portal,

the

enterprise’s

headquarter,

branches,

and

representative offices. If there are unsettled financial obligations, the decision on dissolution shall be enclosed with the debt settlement plan and sent to the creditors, people with relevant rights, obligations, and interests. The plan must contain the creditors’ names and addresses; the amount of debts, deadline, location, and method of payment; method and deadline for settlement of creditors’ complaints. In next step, the business registration authority shall post a notification of the status of every enterprise undergoing dissolution process on the National Business Registration Portal right after receiving the decision on dissolution from the enterprise. The notification must be posted together with the decision on dissolution and debt settlement plan (if any). And then, the enterprise’s debts shall be paid in the following order: - Unpaid salaries, severance pay, social insurance as prescribed by law, other benefits of employees according to collective bargaining agreement and signed employment contracts; -

Tax debts;

- Other debts.

After all debts and dissolution costs are paid, the remaining value shall be received by the members of the company. When the debts are all be paid, the legal representative of the enterprise shall send the petition for dissolution to the business registration authority within 05 working days from the day on which all of the enterprise’s debts are settled. After that, the business registration authority shall update the enterprise’s legal status of National Enterprise Registration Database if no opinions or objections from relevant parties are received after 180 days from the day on which the decision on dissolution is receipt as prescribed in Clause 3 of this Article or within 05 working days from the receipt of the petition for dissolution. Finally, government shall elaborate the procedures for business dissolution. b. Compulsory dissolution: Pursuant to Article 203, Law on Enterprise 2014, in case the partnership is revoked Certification of Business registration or under a Court’s decision, the procedure to dissolve a partnership shall be carried out as follows: - The business registration authority shall post a notification of the status of the enterprise undergoing dissolution process on the National Business Registration Portal concurrently with issuing a decision to revoke the Certificate of Business registration or as soon as receiving an effective decision on dissolution issued by a Court. The notification shall be posted together with the Court’s decision to revoke the Certificate of Business registration; - Within 10 days from the receipt of the decision to revoke the Certificate of Business registration or from the effective date of the Court’s decision, the enterprise shall convene a meeting to decide the dissolution. The

decision on dissolution and copy of the decision to revoke the Certificate of Business registration or the effective Court’s decision shall be sent to the business registration authority, tax authority, and employees of the enterprise, and be posted at the enterprise’s headquarter and branches. If required by law, the decision shall be posted on at least 03 consecutive issues of a conventional newspaper or online newspapers. - If there are unsettled financial obligations, the decision on dissolution shall be enclosed with the debt settlement plan and sent to the creditors, people with relevant rights, obligations, and interests. The plan must contain the creditors’ names and addresses; the amount of debts, deadline, location, and method of payment; method and deadline for settlement of creditors’ complaints. - The enterprise’s debts shall be paid in accordance with Clause 5 Article 202 of this Law. - The legal representative of the enterprise shall send the petition for dissolution to the business registration authority within 05 working days from the day on which all of the enterprise’s debts are settled. - The business registration authority shall update the enterprise’s legal status of National Enterprise Registration Database if no opinions or objections from relevant parties are received after 180 days from the notification date prescribed in Clause 1 of this Article or within 05 working days from the receipt of the petition for dissolution. - The company manager is personally responsible for the damage cause by failure to comply with or to completely comply with regulations of this Article.