legal english 3

OUTLINE FOR LEGAL ENGLISH PRESENTATION
Topic: Enterprise Dissolution under Vietnam Enterprise Law 2005

A. Introduction

General view of “Enterprise dissolution”
B. Body

I.       Authority of making enterprise dissolution decision

II.    Cases of and conditions for dissolution of enterprises

III. Procedures for dissolution of enterprises

IV. Legal result after the issuance of dissolution decision

C. Closing 
Actual dissolution situation of Vietnam Enterprise in recent years

A.   Introduction

Enterprise dissolution is the stop of the existence of the enterprise. Dissolution is decided by the enterprise owners. In some cases, the enterprise is dissolved because of trespassing the rules of state management in commercial activities. The enterprise managers are usually those who directly realize the company’s assets, discharge debts and order to delete enterprise’s name at the business registration office.

B.   Body

I.      Authority of making enterprise dissolution decision

According to Vietnam Enterprise Law in 2005, authority of making enterprise dissolution decision is regulated as below:

First of all, enterprise owners always have the right to decide on dissolution. They are different ones of different forms of enterprise: The owner of a private enterprise; the Members’ Council of a partnership; the Members’ Council of a limited liability company with two or more members; the owner of a one-member limited liability company; the Shareholders’ Meeting of a Join-Stock company. These cases are called voluntary dissolution.

Besides, the competent bodies also have authority to the life of an enterprise. This occurs with compulsory dissolution enterprises. The detailed cases that lead to various authorities of making decision will be mentioned in the following part.

II.   Cases of and conditions for dissolution of enterprises

An enterprise shall be dissolved in the following cases:

-         According to the company's charter, the duration of the operation of it had ended and there's no decision to renew.

-         A decision made by executive management officers of the enterprise such as the enterprise owner for private enterprises, all general partners for partnerships, the Members' Council or the company owner for limited liability companies, the Shareholders' Meeting for joint-stock companies;

-         According to the provisions of this Law, a company no longer has the minimum number of members for six consecutive months;

-         The certificate of business registration of the company is revoked

III. Procedures for dissolution of enterprises

1.     Process of dissolution

There are five steps in procedure for the dissolution of an enterprise.  Firstly, the decision on the dissolution of the enterprise including some principal contents such as name and address of the head office of the enterprise, reasons for the dissolution is adopted. Secondly, the owner of the company shall directly organizes the liquidation of enterprise's properties. Thirdly, within seven working days since the date the dissolution decision is approved, it must be sent to the business registration office and the related people as well as publicly disclosed at the enterprise's head office. It then would be published in at least three continuous issues of a printed or electronic newspaper. Fourthly, the debts of the dissolved enterprise shall be paid off according to the statutory instruction. Finally, the representative-at-law of the enterprise must file a dossier on its dissolution to the business registration office within seven working days from the date of making complete payment of all debts. The business registration office shall remove the name of the enterprise in its business registration book if the dossier submitted is valid. In case an enterprise has its business registration certificate revoked, such enterprise must be dissolved within six months as from the date of such withdrawal. The order and procedures for dissolution shall obey with the provisions of the Enterprise Law.

2.     The order of paying debts in the dissolved enterprise

According to Vietnam Enterprise Law in 2005 as specified in the above part, an enterprise shall be dissolved in accordance with 6 provisions of Art 158. One essential liability that an enterprise must deal with before being dissolved is paying debts.  We hereby concentrate on the order of paying debts in a dissolved enterprise, which has to be done after the dissolution decision has been sent to the business registration office, all creditors, people with related rights, obligations and interests, and workers of the enterprise (such decision shall be publicly posted at the enterprise's head office).

According to Vietnam Enterprise Law in 2005, Article 158(4), the debts of the dissolved enterprise shall be paid in the following order:

First of all, that is unpaid salaries and severance allowance.  Severance allowance is known as the subsidy or the grant for those who stop working.

After that, the enterprise shall complete Social insurance in accordance with the law. The term “Social insurance” is defined in Law on social insurance as the guarantee to fully or partially offset a laborer's income that is lost or reduced due to his/her sickness, maternity, labor accident, occupational disease, unemployment, retirement or death, on the basis of his/her contributions to the social insurance fund.

The next step is paying off other benefits of workers according to signed bargaining agreements and labor contracts.

Last but not least, that is the tax debts and other debts that the enterprise must liquidate. The remaining assets just belong to private enterprise owners, members or shareholders after all of the debts and dissolution expenses have been paid by the dissolved enterprise.

III.           Legal result after the issuance of dissolution decisions

An enterprise dissolved refers that it no longer exists as a going concern or a running company. But it doesn’t mean it stops all the activities. After dissolution decision is issued, the enterprise will be prohibited from carrying out some following particular activities:

-         Hide and disperse assets or all kinds of property.

-         Disclaim or reduce the right of claiming unpaid debts.

-         Convert unsecured debts, usually the debts to suppliers, into secured debts such as dues to banks. It is conducted with the company’s assets.

-         Trade new transaction. After being dissolved, the enterprise is not permitted to sign any other contracts but those necessary for the process of dissolution.

-         Pledge, mortgage, donate or lease assets. The rest property of the enterprise must be used for dealing liability and conducting the dissolution procedure.

-         End up performing already effective contracts. Terminating the contract without reason is a breach of contract. The dissolved companies still have to maintain their responsibility as specified in terms of available contracts.

-         Mobilize or raise capital in any different ways.

C.   Closing

Dissolution is putting an end to the existence of an enterprise. The fact is so many companies in Vietnam are under that situation. Recent statistic has shown that the number of enterprise which are dissolved or temporarily cease operating increase by 12.2% in the first two months of this year in compare with the same time of the previous year. This trend is predicted to continue in future. We hope that there will be less compulsory dissolved enterprises and the existing businesses will get much more legal profits from their dealings so that they can contribute to the economy of our nation.