Is it possible to dissolve the company when the company is established but is not yet qualified to operate?

Is it possible to dissolve a company when the company is established but is not yet qualified to operate?

Is it possible to dissolve a company when the company is established but is not yet qualified to operate, based on Article 207 Law on Enterprises 2020 stipulates as follows:

Cases and conditions for dissolution of enterprises

1. The enterprise is dissolved in the following cases:

a) At the end of the operating term stated in the company charter without a decision to extend;

b) According to the resolution or decision of the business owner for private enterprises, of the Board of Members for partnerships, of the Board of Members and company owner for limited liability companies, and of the General Meeting of Shareholders for joint stock company;

c) The company no longer has the minimum number of members as prescribed by this Law for a period of 06 consecutive months without carrying out procedures for converting the type of business;

d) The Business Registration Certificate is revoked, unless otherwise prescribed by the Law on Tax Administration.

2. Enterprises can only be dissolved when they ensure payment of all debts and other property obligations and are not in the process of resolving disputes at Court or Arbitration. The relevant manager and the enterprise specified in Point d, Clause 1 of this Article are jointly responsible for the debts of the enterprise.

Therefore, there is no limit on the time of operation before the company is dissolved or how long after its establishment, so you have the right to decide to dissolve the company, but must ensure the condition that all debts and other property obligations must be paid and not in the process of resolving disputes at Court or Arbitration.

What will be included in the company dissolution file when establishing the company but not yet qualified to operate?

The company dissolution file when establishing the company but not yet qualified to operate is specified in Article 210 of the Law on Enterprises 2020 including:

– Notice of company dissolution;

– Report on liquidation of corporate assets; List of creditors and paid debts, including payment of all tax debts and social insurance, health insurance, and unemployment insurance payments for employees after deciding to dissolve the enterprise (if any).

Members of the Board of Directors of joint stock companies, members of the Board of Members of limited liability companies, company owners, owners of private enterprises, Director or General Director, general partners, legal representatives of the enterprise are responsible for the truthfulness and accuracy of the enterprise dissolution documents.

In case the dissolution dossier is inaccurate or fake, the above-mentioned people must be jointly responsible for paying unresolved employee benefits, unpaid taxes, other unpaid debts, and be personally responsible before the law for the consequences arising within 05 years from the date of submitting the enterprise dissolution dossier to the Business Registration Authority.

When dissolving a company, in what order must debts be paid?

When dissolving a company, debts must be paid in the order of priority specified in Clause 5, Article 208 of the 2020 Enterprise Law as follows:

Order and procedures for business dissolution enterprise

The dissolution of an enterprise in the cases specified in Points a, b and c, Clause 1, Article 207 of this Law is carried out according to the following provisions:

…

5. The enterprise’s debts are paid in the following order of priority:

a) Salary debts, severance pay, social insurance, health insurance, unemployment insurance as prescribed by law and other benefits of employees according to the collective labor agreement and signed labor contract;

b) Debts taxes;

c) Other debts;

6. After paying the business dissolution costs and debts, the remaining portion is divided among the private business owner, members, shareholders or company owners according to the ratio of ownership of capital contributions and shares;

7. The legal representative of the enterprise sends the enterprise dissolution documents to the Business Registration Authority within 05 working days from the date of payment of all debts of the enterprise;

…

Accordingly, when dissolving the company, debts must be paid in the following order of priority:

– Salary arrears, severance pay, social insurance, health insurance, unemployment insurance as prescribed by law and other benefits of employees according to the collective labor agreement and signed labor contract;

– Tax debt;

– Other debts.