Procedures for Dissolving a Multi-Member Limited Liability Company

How are the procedures for dissolving a multi-member limited liability company carried out? What does the dissolution dossier of a multi-member limited liability company include?

1. In which cases and under what conditions may a multi-member LLC be dissolved?

Article 207 of the Law on Enterprises 2020 regulates the cases and conditions for enterprise dissolution as follows:

– An enterprise shall be dissolved in the following cases:

• Expiry of the operating term stated in the company charter without a decision on extension;
• Pursuant to a resolution or decision of the enterprise owner for a private enterprise, of the Members’ Council for a partnership, of the Members’ Council or company owner for a limited liability company, or of the General Meeting of Shareholders for a joint stock company;
• The company no longer has the minimum number of members prescribed by this Law for 06 consecutive months without carrying out procedures to convert the type of enterprise;
• Revocation of the Enterprise Registration Certificate, except where the Law on Tax Administration provides otherwise.

– An enterprise may only be dissolved when it ensures full payment of all debts and other asset obligations and is not in the process of dispute resolution at a Court or Arbitration. The relevant managers and the enterprise prescribed in point (d), Clause 1 of this Article shall be jointly responsible for the enterprise’s debts.

2. What does the dissolution dossier of a multi-member LLC include?

Article 210 of the Law on Enterprises 2020 regulates the enterprise dissolution dossier as follows:

– The enterprise dissolution dossier includes the following documents:

• The notice of enterprise dissolution;
• The enterprise asset liquidation report; the list of creditors and debts already paid, including full payment of tax debts and social insurance, health insurance, and unemployment insurance debts for employees after the enterprise dissolution decision (if any).

– Members of the Board of Directors of a joint stock company, members of the Members’ Council of a limited liability company, the company owner, the private enterprise owner, the Director or General Director, general partners, and the legal representative of the enterprise are responsible for the truthfulness and accuracy of the enterprise dissolution dossier.

– Where the dissolution dossier is inaccurate or forged, the persons prescribed in Clause 2 of this Article shall be jointly responsible for paying unresolved employee benefits, unpaid taxes, and other unpaid debts, and shall bear personal responsibility before the law for the consequences arising within 05 years from the date of submitting the enterprise dissolution dossier to the Business Registration Office.

3. How are the procedures for dissolving a multi-member LLC carried out?

The procedures for dissolving a multi-member limited liability company are carried out under Article 208 of the Law on Enterprises 2020, specifically:

Dissolution of an enterprise in the cases prescribed in points (a), (b), and (c), Clause 1, Article 207 of this Law shall be carried out as follows:

– Adopting a resolution or decision on enterprise dissolution. The resolution or decision on enterprise dissolution must include the following key contents:

• Name and head office address of the enterprise;
• Reasons for dissolution;
• Time limit and procedures for liquidating contracts and paying the enterprise’s debts;
• Plan for handling obligations arising from labor contracts;
• Full names and signatures of the private enterprise owner, company owner, Chairman of the Members’ Council, or Chairman of the Board of Directors;

– The private enterprise owner, Members’ Council or company owner, or Board of Directors shall directly organize the liquidation of the enterprise’s assets, unless the company charter provides for the establishment of a separate liquidation organization;

– Within 07 working days from the date of adoption, the dissolution resolution or decision and the meeting minutes must be sent to the Business Registration Office, the tax authority, and the employees of the enterprise. The dissolution resolution or decision must be published on the National Enterprise Registration Portal and publicly posted at the head office, branches, and representative offices of the enterprise.

Where the enterprise still has unpaid financial obligations, the dissolution resolution or decision together with the debt settlement plan must be sent to creditors and persons with related rights, obligations, and interests. The debt settlement plan must state the name and address of the creditors; the amount of debt, time limit, place, and method of payment of such debts; and the manner and time limit for resolving creditors’ complaints;

– The Business Registration Office must announce the status of the enterprise undergoing dissolution procedures on the National Enterprise Registration Portal immediately after receiving the enterprise’s dissolution resolution or decision. Attached to the announcement must be the published dissolution resolution or decision and the debt settlement plan (if any);

– The enterprise’s debts shall be paid in the following order of priority:

• Wage debts, severance allowances, social insurance, health insurance, and unemployment insurance as prescribed by law and other employee benefits under the collective labor agreement and signed labor contracts;
• Tax debts;
• Other debts;

– After payment of the enterprise dissolution costs and debts, the remainder shall be distributed to the private enterprise owner, members, shareholders, or company owner in proportion to their capital contribution or share ownership ratios;

– The legal representative of the enterprise shall send the enterprise dissolution dossier to the Business Registration Office within 05 working days from the date of full payment of all the enterprise’s debts;

– After 180 days from the date of receipt of the dissolution resolution or decision as prescribed in Clause 3 of this Article without receiving opinions on the dissolution from the enterprise or written objections from related parties, or within 05 working days from the date of receipt of the dissolution dossier, the Business Registration Office shall update the legal status of the enterprise on the National Enterprise Registration Database;

– The Government shall provide detailed regulations on the procedures for enterprise dissolution.