Business Separation
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.
Prepare a plan for dividing the company.
The Board of Members, the General Meeting of Shareholders, or the company owner passes a resolution or decision regarding the division of the company 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, including the approved division plan.
Processing time: 3-5 business days
Transfer of assets and obligations
Distribute and transfer assets, capital, rights, and obligations to the new companies according to the approved 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 and begins to exercise its own rights and obligations.
Business separation documents
The business separation documents include:
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Resolution or Decision of the company owner, Board of Members, or General Meeting of Shareholders regarding the division of the company.
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The division plan has been approved, specifying the newly established companies, the method of asset distribution, and the rights and obligations.
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List of creditors and the company's debt resolution plan.
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Plan for employee utilization after the business separation.
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Articles of incorporation for newly established companies.
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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
During the process of suspending or splitting a business, the business's assets are divided according to market value and ownership is transferred to the relevant parties, including the new companies or entities receiving the transferred assets.
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 complete periodic reports or related obligations may result in administrative penalties.
