Dividing the business
Detailed guide on the process, procedures, and legal documents required for business separation as stipulated in the 2020 Enterprise Law.
Division, separation, merger
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According to Articles 195-197 of the 2020 Enterprise Law, business separation is the process by which a company (the separated company) transfers a portion of its assets, rights, and obligations to a new company or newly established companies.
Drafting a merger agreement
The Board of Members, the General Meeting of Shareholders, or the company owner passes a resolution or decision regarding the separation of the business in accordance with regulations.
Treatment time: 7-10 days
Announcement regarding the company split.
The company will notify its creditors, employees, and partners with existing contracts in writing about the company's division.
Implementation period: 15 days from the date the resolution on division is passed.
Registering a new company
Prepare and submit business registration documents for newly established companies in accordance with regulations, including the approved separation plan.
Processing time: 3–5 business days.
Transfer of assets and obligations
The assets, capital, rights, and obligations of the new companies will be divided and transferred according to the approved separation plan.
Implementation time: 30–60 days, depending on the size of the business.
Separation process complete.
The company that was spun off continues to operate as before, while the newly spun-off company operates as an independent legal entity, beginning to exercise its own rights and obligations.
Business separation documents
The business separation file includes the following documents:
- Resolution or Decision of the company owner, Board of Members, or General Meeting of Shareholders regarding the division of the company.
- The split plan has been approved, outlining the newly formed companies, the method of asset distribution, and the rights and obligations.
- List of creditors and the company's debt resolution plan.
- Plan for employee utilization after the business separation.
- Articles of incorporation for newly established companies.
- Business registration documents for new companies as stipulated by the Enterprise Law.
Division of assets and liabilities
During the period of temporary suspension of operations, the business has the following responsibilities towards its employees:
Property division
Assets are divided according to market value and ownership is transferred to the relevant parties, including newly formed companies or transferees.
Division of responsibilities
Businesses divide their legal obligations, including tax obligations, loan debts, intellectual property rights, and licenses related to their business operations.
Note: Failure to submit periodic reports may result in administrative penalties.
