Skip Ribbon Commands
Skip to main content
Link Web
Business > Posts > Liquidation Before Closing Business
Closing a BusinessWednesday, 03/23/2005, 04:04

Liquidation Before Closing Business

Upon terminating an operation on or prior to the date of expiry stated in the investment license, foreign-invested enterprises (100% foreign-owned or joint venture enterprises) must proceed with the liquidation of assets and liabilities.
Liquidation Before Closing Busin


Liquidation Before Closing Business


Upon terminating an operation on or prior to the date of expiry stated in the investment license, foreign-invested enterprises (100% foreign-owned or joint venture enterprises) must proceed with the liquidation of assets and liabilities.

According to Circular 03BKH-QLDA dated March 15, 1997 by the Ministry of Planning and Investment (MPI) giving guidelines for implementation of foreign investment projects in Vietnam, the non-refundable transfer of assets of the foreign party upon termination of the contract is made in accordance with stipulations in the joint venture agreement and investment license. At least six months prior to the termination of operation, the Vietnamese party in the joint venture enterprise and the owner of the 100% foreign-owned enterprise must report to the Ministry of Finance and the investment licensing authority on the non-refundable transfer of assets by the foreign party.

The joint venture enterprise must establish a liquidation board to assist the board of directors in liquidation issues. The board represents the enterprise in liquidation activities and is responsible to the law for these activities.

Within 15 days of the date of establishment, the board must hold its first meeting to approve its plan, mode and fund for operation and submit them to the board of directors for approval. It must also announce the liquidation of the enterprise in the media.

Upon conclusion of the term of liquidation as stipulated in Article 33 of Government Decree 12/CP stipulating in detail the implementation of the Law on Foreign Investment in Vietnam, the liquidation board must end its operation even if it has not yet completed the liquidation. The parties to the joint venture must handle all the outstanding issues. In case of dispute, it must be settled in accordance with Article 102 of Decree 12/CP.

Upon completion of the liquidation, the board of directors must send a report on the result of liquidation to the licensing authority and the Ministry of Planning and Investment. In case of need, the ministry can ask a specialized agency to re-examine the liquidation result before issuing a final decision on liquidation, revoking the investment license and notifying the decision to relevant authorities. The cost of re-examination must be borne by the enterprise concerned.

Foreign investors can only repatriate the earnings from the liquidation of assets after completing the liquidation and obtaining approval by the investment licensing authority.
 

 


Views: 1 Print Back
 
Date: