Issue 061025 – Regulations, procedures, dossiers for enterprise dissolution

Dear Valued Clients,

During their operation, enterprises may encounter various situations: declining business performance, strategic changes, or legal obstacles that cannot be resolved. In such cases, choosing dissolution is a lawful and orderly way to terminate operations, while protecting the rights of employees, creditors, and other stakeholders.

Dissolution is not merely about “applying to shut down.” Enterprises must fulfill all financial obligations, settle contracts, and liquidate assets before being officially recognized by the registration authority as “completely dissolved.” This article presents the regulations, procedures, and practical notes to help enterprises implement dissolution correctly and minimize risks.

1. Dissolution – definition and cases under the law

Enterprise dissolution is a legal procedure that terminates the legal status of an enterprise – meaning the enterprise ceases to exist as a legal entity, and its rights and obligations are terminated (after being settled).

According to Article 207 of the current Law on Enterprises and related guidelines, typical cases of enterprise dissolution include:

• Expiration of the duration of operation stated in the Charter without extension.
• Decision of the Owner / Members’ Council / General Meeting of Shareholders (depending on the type of enterprise).
• Failure to maintain the minimum number of members required by law for six consecutive months without converting to another type of enterprise.
• Revocation of the Enterprise Registration Certificate.
• Pursuant to a Court decision.
• However, for dissolution to be accepted, the enterprise must ensure that all debts are settled, other financial obligations are fulfilled, and the enterprise is not involved in ongoing disputes at court or arbitration.

2. Procedures for enterprise dissolution

Although the details may vary depending on the type of enterprise and circumstances (voluntary or compulsory, with or without revenue), the process can be summarized into the following steps:

Practical notes:

• Voluntary dissolution – without invoices/revenue: relatively simple, only requires fulfilling tax obligations, settling debts, closing bank accounts, and submitting dossiers to the Tax Authority and Business Registration Office.
• Voluntary dissolution – with invoices/revenue: in addition to the above, the enterprise must submit an invoice cancellation notice (as prescribed by tax law), obtain tax clearance, submit finalization reports, and reconcile outstanding tax obligations.
• Compulsory dissolution (e.g. license revocation, court order): different procedures apply, such as publication of the revocation decision, public posting of notices, submission of the dissolution decision together with the revocation order and holding member/shareholder meetings within a statutory timeframe (10 days from the decision).
• Upon dissolution, all branches, representative offices, and business locations must also be dissolved simultaneously.

3. Dissolution dossiers

Depending on the type of enterprise and circumstances (voluntary/compulsory, with or without revenue), dissolution dossiers may vary. Common documents include:

• Dissolution resolution/decision + meeting minutes (if multiple members/shareholders).
• Dissolution notice.
• List of employees, list of creditors, and debt settlement status.
• Asset liquidation report.
• Certificate of tax clearance, confirmation of no customs tax liabilities.
• Confirmation of fulfillment of social insurance obligations for employees.
• Certificate of seal return to the police authority.
• Original Enterprise Registration Certificate.
• Power of attorney (if the authorized representative submits the dossier).

Thus, depending on the case, enterprises must prepare dissolution dossiers in accordance with legal requirements. Dissolution dossiers must be submitted to both the Tax Authority and the Business Registration Office. Although some documents may overlap, they must still be fully submitted to both authorities.

4. Risks of non-compliance

Failure to carry out dissolution in accordance with the law may lead to significant legal risks, such as:

• Unsettled debts/obligations: owners, members, or shareholders may be held jointly liable with their personal assets.
• Asset dissipation/evasion of obligations: owners may face criminal liability if they abscond or transfer assets to avoid obligations.
• Failure to complete tax finalization/unfulfilled tax obligations: the dissolution dossier will not be accepted; the enterprise may be subject to tax enforcement and restrictions on the legal representative’s rights.
• Labor disputes: employees may file lawsuits or complaints if wages, severance, or insurance are delayed.
• Contracts signed during dissolution procedures: if the enterprise enters into or performs contracts before completing dissolution, such contracts may be invalid or subject to litigation.
• “Frozen” information in the system: the enterprise may be denied new official documents and restricted in transactions with authorities or banks.
• Prolonged dissolution process: if disputes, objections, or delays occur, the update of “dissolved” status may take up to 180 days in cases of license revocation.

5. Conclusion

Dissolution is an important transition, marking the legal and transparent termination of an enterprise’s operations. To ensure proper execution, enterprises must thoroughly understand the legal framework, prepare dossiers carefully, and fulfill financial, tax, labor, and asset obligations.

By taking into account practical details (such as whether revenue has arisen, whether dissolution is voluntary or compulsory, and tax settlement requirements), enterprises can avoid mistakes, minimize risks, save time, and protect the legal rights of the owner and all stakeholders.

Best regards,
ENT Law LLC