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Ending a company legally involves a process known as “liquidation.” Liquidation is the process of dissolving a company and distributing its assets to creditors and shareholders. This process can be voluntary or involuntary, and is typically initiated by the company’s directors or shareholders.

In Vietnam, the steps to legally end a company include:

Obtaining approval from the company’s shareholders: In order to liquidate a company in Vietnam, the company’s shareholders must first approve the decision to dissolve the company. This is typically done through a vote at a shareholders’ meeting.

Filing a liquidation declaration with the Ministry of Planning and Investment: Once the decision to liquidate the company has been approved by the shareholders, a liquidation declaration must be filed with the Ministry of Planning and Investment. This declaration must include information about the company’s assets, liabilities, and shareholders.

Paying debts and liabilities: Once the liquidation declaration has been filed, the company must pay all of its debts and liabilities. This includes outstanding loans, employee salaries, and taxes owed to the government.

Distributing assets to creditors and shareholders: After all debts and liabilities have been paid, the company’s remaining assets are distributed to creditors and shareholders. This distribution is typically done in accordance with the company’s articles of association and the priorities set out in the Vietnamese Commercial Law.

Cancelling business registration: Once the assets have been distributed and all debts have been paid, the company’s business registration must be cancelled. This is done by filing a cancellation declaration with the Ministry of Planning and Investment.

It is important to note that the liquidation process in Vietnam can be complex and time-consuming, and it is recommended that companies work with experienced legal professionals to ensure that the process is completed correctly and in compliance with local laws and regulations. Failure to follow the proper procedures can result in significant fines and penalties, and can also harm the reputation of the company and its shareholders.

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There are many reasons why you might want to dissolve or liquidate your limited company. Perhaps you experienced early success, but the market has now shifted, or maybe your business is still successful but you are approaching retirement and there is no one available to take over from you. Whatever your reasons for closing you company, you should explore the range of options open to you, as reversing this decision can be costly.

There are two ways to terminate a company.

1/ Company dissolution: 

To dissolve a company, also known as ‘striking off’, essentially means removing the name of the business from the official Company Registry. After dissolution, the company ceases to legally exist. The dissolving of a company is often a voluntary process; however the Company Registry can dissolve companies that have not kept up with their accounting responsibilities such as filing accounts and tax returns.

In order to proceed with voluntary dissolution, all loose ends, including the payment of outstanding taxes and creditors, must be tied up. Due to this, dissolution is only an option for solvent companies and should not be seen as a way to evade creditors. There are certain conditions that must be met before a company is eligible for dissolution.

2/ Company liquidation: 

Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due. As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims. 

PCA is able to help, please contact us. 

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