When establishing a business, dissolution is something that no business owner wants. However, there are cases where the dissolution of enterprises is compulsory or it is the best way to protect the rights of workers and businesses from irreparable difficulties. It is a fact that businesses that have not paid all their debts will be dissolved or not, to find out this issue, please read the following article.

Legal grounds:

Enterprise Law 2014

Concept of enterprise dissolution

Dissolution indicates the absence or makes no longer eligible to exist as a whole, an organization. Accordingly, the dissolution of an enterprise is understood as the termination of the legal person status and related rights and obligations of the enterprise.

Cases of enterprise dissolution

Enterprise dissolution has 02 cases of voluntary dissolution or compulsory dissolution. According to Clause 1, Article 201 of Enterprise Law No. 68/2014 / QH13, an enterprise is dissolved in the following cases:

Voluntary dissolution

– The enterprise terminates the period stated in the company’s charter without a decision to extend it.

In case the company’s charter provides for the term of operation of the enterprise, upon the expiry of this period, if the members do not want to extend the operation, the company must proceed with dissolution.

The operation duration of an enterprise may be agreed upon by the founding members or shareholders or by the permission of the competent State agency as prescribed.

– According to the decision of the business owner

The enterprise is dissolved under the decision of the owner of the enterprise in respect of a private enterprise, of all general partners, for a partnership, of the Members’ Council, of the company owner, for limited liability companies. General Meeting of Shareholders of the joint stock company.

In this case, the decision to dissolve comes from the willingness and initiative of the business owner. The dissolution may be due to low profits, prolonged losses … businesses choose to dissolve to recover capital or to switch to other types of business.

Mandatory dissolution

– The company no longer has the minimum number of members as stipulated by the Enterprise Law for 6 consecutive months.

For some types of businesses, having a minimum number of members is one of the conditions for existence and operation.

For example, a partnership must have at least two individuals who are general partners (Clause 1, Article 172 of the Law on Enterprises).

Accordingly, when the minimum number of members is not enough, the company must add members to the minimum minimum number, if within 06 consecutive months without adding enough members or not converting to business type. In other enterprises, enterprises must be dissolved.

– Revoked certificate of enterprise registration

An enterprise registration certificate is a paper or electronic version issued by a business registration agency to an enterprise, recording information on enterprise registration (according to Clause 12, Article 3 of the 2014 Law on Enterprises.)

Therefore, the revocation of an enterprise registration certificate also means that the State does not recognize the legal status of the enterprise.

Accordingly, within 10 days after receiving the effective decision on revocation of the enterprise registration certificate or court decision, the enterprise must convene a meeting to decide on dissolution.

Conditions for enterprise dissolution

One of the important issues that plays a key role in the dissolution of a business is its ability to repay its debt.

Therefore, enterprises are only dissolved when they guarantee to pay all debts and other property obligations and they are not in the process of settling disputes at courts or arbitration agencies (Clause 2, Article 201 of the Law on Enterprises). (Decree No. 68/2014 / QH13).

In order to dissolve, an enterprise is required to prepare a dossier including a list of creditors and paid debts, including payment of all tax debts and social insurance premiums and the following employees. when deciding to dissolve the enterprise (if any).

Enterprises’ debts shall be paid in the following order:

– Salary debts, severance allowances, social insurance in accordance with law and other benefits of employees under the signed collective labor agreement and labor contract;

– Tax debt;

– Other debts.

Therefore, whether it is voluntary or compulsory dissolution, the enterprise must ensure to pay all debts and other financial obligations.