In the context of a volatile business market, many enterprises are compelled to cease operations and undergo dissolution. The following article by NPLaw provides an overview of the current legal regulations regarding handling company assets prior to dissolution.
I. The importance of handling company assets prior to dissolution in the current context
Handling company assets before dissolution plays a crucial role, particularly when the company has outstanding financial obligations. If this process is conducted in a non-transparent or non-compliant manner, it can prolong the dissolution procedure, trigger disputes with creditors, or even result in legal liability for managers.
For instance: Company A, headquartered in Ho Chi Minh City, transferred a series of valuable assets to a third party at prices below market value during its dissolution process. Then, creditors filed lawsuits claiming that the company was dissipating assets to avoid debt obligations. Consequently, the dissolution process was suspended, the management board took legal responsibility, and the transferred assets were reclaimed, causing serious economic and reputational damage for all parties involved.
II. What is handling company assets prior to dissolution?
1. Definition
Handling company assets prior to dissolution refers to the process of classifying, valuing, allocating, and liquidating all company assets (both tangible and intangible) to settle financial obligations before completing the legal termination procedures of the enterprise under applicable laws and the company charter. It is to ensure that all company assets are managed transparently, fairly, and lawfully.
2. Why is it necessary to handle company assets prior to dissolution?
The importance of handling assets prior to dissolution includes:
- Fulfilling financial obligations: It is the primary purpose. Company assets must be managed to settle tax debts, insurance obligations, and debts to employees and other creditors according to the legal order of priority.
- Protecting stakeholders’ rights: The asset handling process ensures that members and shareholders can receive their remaining value after all obligations are met.
- Complying with the law: Proper asset handling is a mandatory step in the dissolution process, ensuring legal completion and preventing future disputes or litigation.
III. Legal provisions on handling company assets prior to dissolution
1. Cases requiring asset handling prior to dissolution
According to Clause 1, Article 207 of the Law on Enterprise 2020, amended and supplemented in 2025, an enterprise is dissolved in the following cases:
- The enterprise’s operating term specified in the company charter expires without an extension.
- Based on a resolution or decision of the enterprise owner (for a sole proprietorship/ private company), the Members’ Council (for a partnership), the Members’ Council or owner (for a limited liability company), or the General Meeting of Shareholders (for a joint-stock company).
- The enterprise no longer has the minimum number of members or shareholders as required by law for six consecutive months without completing the conversion procedure.
- The enterprise’s Business Registration Certificate is revoked, except where otherwise specified by the Tax Administration Law.
Based on Clause 2 of this Article, an enterprise may only be dissolved after ensuring that all debts and other asset obligations are settled, and it is not involved in ongoing disputes before courts or arbitration.
Thus, in these cases, the enterprise must handle assets to ensure full settlement of debts and other obligations.
2. Cases where asset handling prior to dissolution cannot be applied
Pursuant to Clause 2, Article 207 of the Law on Enterprise 2020, amended and supplemented in 2025, an enterprise may only be dissolved after completing all debts and other asset obligations, and it is not involved in ongoing disputes before courts or arbitration.
Accordingly, if the company is a party in a lawsuit or arbitration, or is under investigation by competent State authorities (police, inspectorate, tax authorities, etc.) for legal violations, the enterprise cannot proceed with dissolution procedures, including asset handling, until the legal issues are resolved and final conclusions are issued by the competent authorities.
3. Sanctions for violations related to the asset handling
Depending on the nature and severity of the violation, parties violating regulations on handling company assets prior to dissolution may take:
- Administrative sanctions under Decree 122/2021/ND-CP (Article 58 on violations regarding enterprise dissolution).
- Criminal liability if an act constitutes a crime, under the Penal Code 2015, amended 2017 (e.g., abuse of trust to appropriate property under Article 175; abuse of power or authority to appropriate property under Article 355).
- Civil liability required to compensate individuals or organizations for damages caused by the violation, under the Civil Code 2015.
Complying with legal requirements when handling assets is not only a legal obligation but also the only way to prevent serious legal risks for the enterprise and its managers.
IV. Questions on handling company assets prior to dissolution
1. Who is responsible for handling company assets prior to dissolution?
According to Clause 2, Article 208 of the Law on Enterprise 2020, amended 2025, regarding the procedures for dissolution: The business owner (for a sole proprietorship), the Members’ Council, the company owner, or Board of Management directly organizes the liquidation of company assets, except where the company charter provides for the establishment of a separate liquidation organization.
Thus, unless the company charter establishes a separate liquidation body, the business owner, Members’ Council, company owner, or Board of Management is responsible for asset liquidation prior to dissolution.
2. How are intangible assets, such as intellectual property, handled before dissolution?
According to Clause 1, Article 4 of the Vietnamese Valuation Standards on Intangible Asset Valuation, Circular 37/2024/TT-BTC, intangible assets include: Intellectual property and intellectual property rights as defined by the Law on Intellectual Property.
These intangible assets (e.g., trademarks, patents, copyrights, trade secrets) are company assets and must be handled according to regulations during dissolution, including:
- Valuing assets based on market value at the time of handling.
- Transferring, licensing, or terminating rights according to agreements among stakeholders.
- Ensuring that all company debts and obligations are settled.
3. How should asset handling be conducted if the company has debts?
According to Clause 2, Article 207 of the Law on Enterprise 2020, amended 2025, an enterprise may only be dissolved after ensuring that all debts and other asset obligations are settled, and it is not involved in ongoing disputes before courts or arbitration. In addition, the managers and the enterprise are jointly liable for the company’s debts as specified in Point d, Clause 1 of this Article.
When the enterprise has debts, asset handling must ensure full settlement of debts and other obligations. Additionally, debts must be paid according to the order of priority under Clause 5, Article 208 of the Law on Enterprise 2020, amended 2025:
- Salaries, severance pay, social insurance, health insurance, unemployment insurance, and other employee benefits under labor contracts and collective agreements;
- Tax obligations;
- Other debts.
4. Can assets be transferred during asset handling prior to dissolution?
During the process, asset transfer is allowed provided that:
- Transfers are conducted transparently and at market value.
- Amounts from the transfer are first used to settle all company obligations before distributing profits to owners (Clause 5, Article 208).
- Transfers for the purpose of asset dissipation are strictly prohibited (Point a, Clause 1, Article 211).
This ensures legality and reduces risks of subsequent disputes or claims.
5. What disputes may arise during asset handling prior to dissolution?
Common disputes include:
- Disputes with creditors: Regarding debt repayment, liquidation value, or payment priority.
- Disputes with employees: Regarding wages, severance, or insurance payments.
- Internal disputes: Among members or shareholders regarding the distribution of remaining assets.
Early identification and transparent handling minimize potential disputes.
V. Should enterprises seek legal counsel for asset handling prior to dissolution?
Handling company assets prior to dissolution is not only a mandatory legal procedure but also crucial to protecting the legitimate rights and interests of all stakeholders.
With a team of experienced lawyers and legal experts, NPLaw provides reliable, professional legal services to safeguard clients’ rights effectively. For legal assistance, please contact NPLaw for consultation and support.
