Voluntary dissolution of enterprises has become increasingly common as businesses face financial difficulties, strategic shifts, or no longer have the need to operate. Understanding the relevant legal provisions and procedures, as well as seeking advice from legal professionals, is essential to minimizing legal risks.

I. current situation of voluntary dissolution of enterprises

At present, voluntary dissolution of enterprises is on the rise, particularly in the context of economic fluctuations, intense competition, and financial pressures. Many businesses, especially small and medium-sized enterprises, opt for dissolution to reduce risks and terminate unprofitable operations.

However, in practice, numerous companies encounter difficulties in the process, particularly with debt settlement, tax finalization, and completion of legal documentation. This often results in prolonged dissolution procedures or disputes among stakeholders.

II. What is voluntary dissolution of enterprises?

Voluntary dissolution of enterprises refers to the process whereby a business proactively terminates its operations at the discretion of its management or owners, as prescribed in Article 207 of the Law on Enterprise 2020. Typically, voluntary dissolution arises from reasons such as the expiration of the company’s duration as set out in its Charter without renewal; by resolution or decision of the owner, Members’ Council, or General Meeting of Shareholders; or when the company fails to maintain the statutory minimum number of members without converting its business type. These grounds reflect the autonomous decision-making of the enterprise, without coercion from state authorities.

III. Legal provisions on voluntary dissolution of enterprises

1. Main legal provisions to consider

Before proceeding with the voluntary dissolution of a company, an enterprise must thoroughly understand several key legal provisions to ensure that the dissolution process is carried out lawfully, thereby avoiding the risk of disputes or legal liabilities. These provisions directly relate to the conditions for dissolution, the order of debt payment priority, and the operational restrictions imposed on the enterprise from the date of the dissolution decision. The principal regulations to be noted when carrying out a voluntary dissolution are as follows:

  • Conditions for enterprise dissolution (Article 207 of the Law on Enterprise 2020): An enterprise may only be dissolved after all debts and other property obligations have been fully settled and when it is not involved in any dispute resolution proceedings before a Court or Arbitration body.
  • Order of debt payment priority (Article 208 of the Law on Enterprise 2020): During the dissolution process, debts shall be paid in the following order of priority:
  • Wages, severance pay, social insurance/health insurance/unemployment insurance, and other employee entitlements;
  • Tax liabilities;
  • Other debts.

After the payment of debts and dissolution expenses, any remaining assets shall be distributed to shareholders or owners in proportion to their capital contribution.

  • Operational restrictions following the dissolution decision (Article 211 of the Law on Enterprise 2020): After a dissolution decision has been issued, the enterprise and its managers shall not perform the following acts:
  • Concealing or dispersing assets;
  • Waiving the right to collect debts;
  • Entering into new contracts (except those necessary for the dissolution process);
  • Pledging, mortgaging, or raising capital;
  • Terminating existing contracts.

Any violation of these prohibitions may result in administrative sanctions or criminal prosecution, depending on the nature and severity of the violation.

2. Violations in voluntary dissolution

The voluntary dissolution of a company is the lawful right of an enterprise; however, failure to comply with legal requirements may result in serious violations. Below are some common violations and their corresponding legal consequences:

According to Article 211 of the Law on Enterprise 2020, from the time a dissolution decision is issued, the enterprise and its managers are prohibited from engaging in the following acts:

  • Concealing or dispersing assets;
  • Waiving or reducing the right to collect debts;
  • Converting unsecured debts into secured debts by using the company’s assets as collateral;
  • Entering into new contracts, except for those necessary to carry out the dissolution process;
  • Pledging, mortgaging, gifting, or leasing assets;
  • Terminating the performance of effective contracts;
  • Raising capital in any form.

Violations of these provisions may result in administrative sanctions or criminal liability, depending on the nature and severity of the violation.

Pursuant to Article 58 of Decree No. 122/2021/NĐ-CP, an enterprise shall be subject to a fine ranging from 20,000,000 VND to 30,000,000 VND for committing any of the following acts:

  • Failure to carry out dissolution procedures upon the expiry of its operational term stated in the company charter without any decision on extension;
  • Failure to carry out dissolution procedures when the company no longer maintains the minimum number of members as prescribed for a consecutive period of six (06) months without converting to another type of enterprise;
  • Failure to complete procedures for the termination of operations of its branches, representative offices, or business locations prior to submitting the enterprise dissolution dossier.

In addition, the enterprise may be compelled to take remedial measures, such as completing the dissolution procedures or terminating the operations of its branches, representative offices, or business locations.

IV. Questions on voluntary dissolution of enterprises

1. How are debts handled during voluntary dissolution?

Based on Article 208 of the Law on Enterprise 2020, if a company proceeds with dissolution, the debt settlement process shall be carried out as follows:

  • Payment of debts to employees: Including unpaid wages, severance allowances, social insurance, health insurance, unemployment insurance, and other benefits in accordance with the collective labor agreement or the signed labor contracts.
  • Payment of tax liabilities: Including all outstanding tax obligations as prescribed by law.
  • Payment of other debts: Including debts owed to suppliers, banks, contractual obligations, or any other arising liabilities.

After all debts and dissolution expenses have been fully settled, the remaining assets shall be distributed to the owner of a private enterprise, the members, the shareholders, or the company owner, in proportion to their respective ownership interests or shares.

2. What legal issues may arise from the voluntary dissolution of a company that enterprises should pay attention to?

When conducting a voluntary dissolution, an enterprise should pay attention to the following main legal issues:

  • Debt settlement obligations: The company must settle all debts owed to employees, tax authorities, banks, suppliers, and other creditors in the order of priority prescribed under Article 208 of the Law on Enterprise 2020.
  • Internal disputes: If conflicts arise among shareholders or members regarding the dissolution decision, asset distribution, or debt payment, such disputes must be resolved in accordance with the law or through the Court/Arbitration before the dissolution process can be completed.
  • Legal liability of managers: The legal representative and company managers shall bear joint liability for any outstanding debts or legal violations arising during the dissolution process.
  • Administrative procedures: The dissolution dossier must be complete and valid, including the dissolution decision, meeting minutes, asset liquidation report, certification of tax obligation fulfillment, and the return of the company seal. Failure to provide a complete dossier may result in the rejection of the dissolution or give rise to legal liability.
  • Legal consequences of non-compliance: Failure to comply with legal requirements may lead to administrative penalties, criminal prosecution, or mandatory remedial measures.

These issues require careful consideration and professional legal consultation to ensure that the dissolution process is lawful, transparent, and minimizes risks for the enterprise and related parties.

3. What are the legitimate reasons for a company to decide on voluntary dissolution?

A company may decide to voluntarily dissolve for legitimate reasons as stipulated in Article 207 of the Law on Enterprise 2020, specifically:

  • Expiration of the operational term stated in the company charter without any decision on extension. This is a common reason when the company has achieved its business objectives or no longer has a need to continue operations.
  • According to the resolution or decision of the company owner, depending on the type of enterprise:
  • Private enterprise: Decision of the business owner;
  • Partnership: Decision of the Members’ Council;
  • Limited Liability Company (LLC): Decision of the Members’ Council or the company owner;
  • Joint-stock company: Resolution of the General Meeting of Shareholders.
  • Failure to maintain the minimum number of members as required by law for a consecutive period of six (06) months without converting to another form of enterprise.

These reasons ensure that the decision to dissolve is lawful, voluntary, and does not infringe upon the rights of related parties, thereby providing a legal basis for the company to carry out the dissolution procedure in accordance with the law.

4. What is the procedure for voluntary dissolution?

Pursuant to the provisions of Article 64 of Decree No. 168/2025/NĐ-CP, the procedure for the voluntary dissolution of a company shall be carried out as follows, consisting of detailed steps:

  • Step 1: Submission of the Resolution or Decision on Dissolution

Within 07 working days from the date of adoption of the resolution or decision on dissolution, the enterprise shall submit the following documents to the provincial-level Business Registration Authority:

  • The resolution or decision on dissolution of the business owner, the Members’ Council, or the General Meeting of Shareholders, depending on the type of enterprise;
  • The minutes of the meeting relating to the decision on dissolution;
  • The plan for debt settlement (if any).
  • Step 2: Notification of the Dissolution Status

Within 03 working days, the Business Registration Authority shall:

  • Publish the resolution/decision on dissolution and notify the status of the enterprise on the National Business Registration Portal;
  • Change the legal status of the enterprise and its branches or representative offices in the process of dissolution/termination of operation;
  • Send information to the Tax Authority and the Civil Judgment Enforcement Agency.
  • Step 3: Submission of the Dissolution Dossier
  • Within 05 working days from the date of full debt settlement, the enterprise shall submit the dissolution dossier, including documents as prescribed in Article 210 of the Law on Enterprise.
  • Before doing so, the enterprise must complete procedures for termination of operations of its branches, representative offices, and business locations.
  • Step 4: Confirmation by the Business Registration Authority
  • The Business Registration Authority shall send the dissolution information to the Tax Authority; within 02 working days, the Tax Authority shall respond regarding the fulfillment of tax obligations;
  • Within 05 working days, the Business Registration Authority shall update the enterprise’s legal status to “dissolved” and publish the dissolution notice on the National Business Registration Portal.

        In case the enterprise has not completed tax obligations, the Business Registration Authority shall issue a notice of rejection of the dossier.

  • Step 5: Handling Late Submission of the Dossier
  • If, after 180 days from the date of receipt of the resolution/decision on dissolution, the enterprise fails to submit the dossier, the Business Registration Authority shall automatically change the legal status of the enterprise to “dissolved” and issue a notice to the enterprise;
  • If the enterprise wishes to revoke the dissolution decision, it shall submit a notification enclosed with the resolution/decision of revocation; within 01 working day, the Business Registration Authority shall update the legal status and publish the information on the National Portal.
  • Step 6: Return of the Seal
  • Enterprises using seals issued by the Public Security Authority must return the seal and the Certificate of Seal Registration to such authority in accordance with the law.

5. What happens if a company has multiple branches when conducting voluntary dissolution?

When a company with multiple branches proceeds with voluntary dissolution, each branch must first complete its own termination procedures, including debt settlement, fulfillment of tax obligations, submission of dissolution dossiers to the Business Registration Authority and Tax Authority, and return of its seal (if applicable).

Only after all branches have completed these procedures may the parent company officially register its dissolution. This ensures full compliance with legal regulations and helps prevent legal risks during the dissolution process.

V. Should a company consult a lawyer regarding voluntary dissolution? how to do so?

It is advisable for enterprises to consult a lawyer when carrying out voluntary dissolution in order to ensure legal compliance, proper handling of debts and tax obligations, and avoidance of legal risks.

At NPLaw, enterprises can receive direct or online consultation, including comprehensive guidance on dissolution procedures, preparation of dossiers, dispute resolution, and representation before competent authorities, ensuring that the dissolution process is efficient, lawful, and accurate.