If a business stops operating for too long, will it be dissolved? What is the application for dissolution of an enterprise?

If a business stops operating for too long, will it be dissolved?

Pursuant to Clause 1, Article 207 of the Law on Enterprises 2020, it stipulates the following cases and conditions for dissolution of enterprises:

Cases and conditions for dissolution of enterprises

1. Enterprises are dissolved in the following cases:

a) The operating term stated in the company charter ends without a decision to extend;

b) According to the resolutions and decisions 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 companies;

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 enterprise;

d) The Certificate of Business Registration 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.

At the same time, based on Clause 1, Article 212 of the 2020 Enterprise Law, it is stipulated:

Revocation of Business Registration Certificate

1. Enterprises have their Business Registration Certificates revoked in the following cases:

a) The declared content in the business registration dossier is fake;

b) Enterprises established by people prohibited from establishing enterprises according to the provisions of Clause 2, Article 17 of this Law;

c) The enterprise ceases business operations for 01 year without notifying the Business Registration Authority and the tax authority;

d) The enterprise fails to send a report as prescribed in Point c, Clause 1, Article 216 of this Law to the Business Registration Authority within 06 months from the deadline for sending the report or makes a written request;

d) Other cases according to the Court’s decision or request of a competent authority according to the provisions of law.

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According to regulations, if an enterprise ceases business operations for 01 year without notifying the Business Registration Authority and the Tax Authority, its Business Registration Certificate may be revoked.

At the same time, when the Business Registration Certificate is revoked, the business will be dissolved, unless the 2019 Tax Administration Law provides otherwise.

Thus, compared to your case, if the business stops operating for more than 3 years without notifying the Business Registration Authority and the tax authority, it may be dissolved.

What does the enterprise dissolution file in case of shutdown include?

Enterprise dissolution documents are specified in Clause 1, Article 210 of the Enterprise Law as follows:

Business dissolution records

1. Enterprise dissolution documents include the following documents:

a) Notice of enterprise dissolution;

b) Report on liquidation of enterprise 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).

2. 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.

3. In case the dissolution dossier is inaccurate or fake, the people specified in Clause 2 of this Article 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.

Thus, according to regulations, documents for enterprise dissolution in case of cessation of operations include:

(1) Notice of enterprise dissolution;

(2) 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).

What activities are enterprises not allowed to carry out since the decision to dissolve?

According to the provisions of Clause 1, Article 211 of the 2020 Enterprise Law, since the decision to dissolve the enterprise, the enterprise and its managers are strictly prohibited from carrying out the following activities:

(1) Storing hide or disperse assets;

(2) Give up or reduce debt collection rights;

(3) Convert unsecured debts into debts secured by assets of the enterprise;

(4) Sign new contracts, except in cases of dissolution of the enterprise;

(5) Pawn mortgage, donate, lease property;

(7) Raising capital in any form.

Note: Depending on the nature and severity of the violation, individuals who violate the above acts may be subject to administrative sanctions or criminal prosecution; If damage is caused, compensation must be made.