Dissolution knowledge

Current law stipulates four cases in which a business can be dissolved. Depending on the cause and legal status, the business must follow the corresponding procedures as prescribed:

1. Expiration of the operating period

A business is dissolved when the operating period stated in the company's charter expires without a decision to extend it.

2. According to a resolution or decision of the enterprise

Businesses can proactively cease operations at the discretion of the competent authority corresponding to each type of business:

1. Private enterprises: According to the decision of the private business owner.
2. Limited Liability Company (Single Member): According to the company owner's decision.
3. Limited liability companies with two or more members and partnerships: According to a resolution or decision of the Board of Members.
4. Joint Stock Company: According to a resolution or decision of the General Meeting of Shareholders.

3. The minimum number of members or shareholders is no longer required.

The company no longer has the minimum number of members or shareholders required by the Enterprise Law within the specified period. 6 consecutive months Without going through the procedure to change the type of business, it falls under the category of dissolution as stipulated by law.

4. Business registration certificate revoked.

Businesses whose Certificates of Business Registration are revoked are subject to dissolution., except where the Law on Tax Administration provides otherwise. In this case, the handling of the legal status and related obligations is carried out according to the procedures prescribed by law.

Not all businesses falling under the above categories can immediately complete dissolution. The business must simultaneously meet the following legal conditions:

• Pay off all debts and other financial obligations in full. of the business.
• Fulfill all obligations related to employees., Taxes, insurance, and other relevant parties as stipulated by law.
• Not currently in dispute resolution in court or arbitration.
• In the event of a revocation of the business registration certificate, the business and its relevant managers remain liable for debts as stipulated by law.

Essentially, a distinction can be made between dissolution initiated by the business and dissolution arising from circumstances stipulated by law. This distinction helps determine the correct decision-making authority and the proper procedures for carrying out the dissolution process.

• Dissolution by decision of the company: This is a decision made proactively by the business, for example, at the end of its operating period or when the owner, the Board of Members, or the General Meeting of Shareholders decides to terminate operations.
• Dissolution in accordance with legal provisions: This issue arises when a business no longer has the minimum number of members or shareholders required by law, or when its business registration certificate is revoked.

Businesses should review and process their tax obligations step-by-step to minimize errors and outstanding tax liabilities.

• Inspect and review tax books and records: Compare accounting records, financial statements, invoices, and tax returns to fully determine revenue, expenses, taxes payable, and any amounts eligible for deduction or refund.
• Prepare and submit tax return documents: Complete the tax declaration and settlement documents that are required up to the time of business cessation. According to Decree 252/2026/ND-CP, the deadline for submitting tax settlement documents in the case of dissolution is... no later than 45 days from the date of the dissolution decision..
• Fulfill your tax obligations: Pay all outstanding taxes, late payment penalties, fines, and any other financial obligations that may arise.
• Processing invoices and documents: Review electronic invoices, process invoices with errors, and fulfill all invoice-related obligations as required by regulations.
• Coordinate with the tax authorities: Provide documentation, explanations, and cooperate in handling matters when requested by tax authorities for inspection, verification, or determination of the company's tax obligations.
• Complete tax obligations to proceed with dissolution procedures: After fulfilling all related obligations, the business proceeds with the dissolution registration process in accordance with current regulations; information regarding tax obligations is handled jointly between the business registration authority and the tax authority as prescribed.

This is a case where a business proactively ceases operations pursuant to a resolution or decision of a competent authority. The dissolution process is carried out according to the procedures corresponding to each type of business:

• Expiration of operating period: The operating period stated in the company's charter has expired, and the business has not decided to renew it.
• According to a resolution or decision of the company: Businesses have the authority to decide on dissolution. For sole proprietorships, this is the business owner; for partnerships, it is the Board of Members; for limited liability companies, it is the Board of Members or the owner; and for joint-stock companies, it is the General Meeting of Shareholders.

Some cases of dissolution arise because the business no longer meets the operating conditions or is subject to legal measures as prescribed by law. These cases include:

• The minimum number of members/shareholders is no longer required: The company no longer has the minimum number of members or shareholders required by law within the specified period. 6 consecutive months without going through the procedure of changing the type of business.
• Business registration certificate revoked: Businesses whose business registration certificates are revoked, except in cases where the Law on Tax Administration provides otherwise.

Businesses need to thoroughly review their obligations to each employee and make payments and complete all related procedures before ceasing operations.

• Salaries and other payments: Workers are entitled to full payment of wages, salaries, and other outstanding amounts as stipulated in their employment contracts and legal agreements.
• Severance pay: Employees are eligible for severance pay if they meet the conditions stipulated in the Labor Code.
• Unemployment benefits: If an employee is eligible for unemployment benefits, the employer must comply with the legal regulations.
• Social insurance, health insurance, and unemployment insurance: Businesses must fulfill any outstanding insurance contribution obligations and cooperate in the process of verifying insurance contribution history so that employees can continue to receive benefits as prescribed by law.
• Other benefits: Other employee benefits under labor contracts, collective bargaining agreements, and legal regulations must be fully addressed.
• Payment will be made in the following order of priority: When a business is dissolved, payments related to wages, allowances, insurance, and other employee benefits are among the obligations that take priority over tax debts and other debts.

Businesses should create separate reconciliation statements for each employee, clearly defining salaries, benefits, insurance, and other payments due to minimize disputes during the dissolution process. Payments and fulfillment of obligations to employees must be completed before the business finalizes the dissolution procedures.

Businesses need to fully identify all payments due and carry out the necessary procedures for each employee based on their actual circumstances.

• Salaries and other payments due: Pay all outstanding salaries, wages, allowances, and other amounts as stipulated in the employment contract and legal agreements.
• Severance pay: Employees are entitled to severance pay if they meet the conditions stipulated by labor law.
• Unemployment benefits: If an employee is eligible for unemployment benefits due to the company ceasing operations, the company must comply with the regulations.
• Social insurance, health insurance, and unemployment insurance: Complete all outstanding insurance payments and coordinate the procedures for verifying the payment history so that employees can continue to receive benefits as prescribed by law.
• Benefits under employment contracts and collective bargaining agreements: Settling other legally agreed-upon benefits between the employer and the employee.
• Payment terms: Upon termination of an employment contract, the employer is responsible for paying all amounts related to the employee's entitlements within the timeframe stipulated by labor law; in cases where the employer ceases operations, the payment period may be extended, but not exceeding 30 days as prescribed by law.

During the dissolution process, obligations related to employee benefits are prioritized for payment before tax debts and other debts as stipulated in the regulations on business dissolution. The business needs to complete the review and payment of these obligations before finalizing the dissolution procedures.

Workers should check their wages, working hours, insurance coverage, and benefits before terminating their contract. If eligible for unemployment benefits, workers must follow the procedures stipulated by current employment laws. The Employment Law 2025, effective from January 1, 2026, has amended some regulations regarding unemployment insurance.