Business Dissolution in Vietnam 2026: Conditions, Procedures, and Legal Requirements

Business dissolution is a legal procedure that many business owners choose when they no longer wish to continue operating their companies. However, stopping business activities in practice does not automatically mean that a company ceases to exist from a legal perspective. To have its status updated as “dissolved” by the business registration authority, a company must first fulfill a series of obligations relating to employees, taxes, outstanding debts, and other parties with legitimate interests. Understanding the legal requirements and procedures for business dissolution is therefore essential to avoiding potential legal risks in the future.

When Is a Company Eligible for Dissolution?

Current laws do not allow a business to terminate its operations at any time or under any circumstances. A company may only be dissolved when one of the legal grounds prescribed by the Law on Enterprises applies.

A company may terminate its existence when the operating term specified in its Charter expires and no decision to extend that term is adopted. Dissolution may also result from a voluntary decision made by the business owner or by the company’s governing body, such as the Members’ Council or the General Meeting of Shareholders. In addition, if a company fails to maintain the minimum number of members required by law for a continuous period of six months without converting into another type of business entity, it may also be subject to dissolution.

Furthermore, a company whose Enterprise Registration Certificate has been revoked may also be dissolved in accordance with the law. These circumstances are provided under Article 207 of the Law on Enterprises 2020.

Essential Conditions Before Carrying Out Dissolution Procedures

Meeting one of the statutory grounds for dissolution does not mean that a company can immediately terminate its legal existence. Before submitting a dissolution application, the company must demonstrate that it has fulfilled all financial obligations and settled all liabilities incurred throughout its operation.

Under the Law on Enterprises, a company may only be dissolved after all outstanding debts have been fully paid and provided that it is not involved in any dispute currently being resolved by a court or an arbitral tribunal. This requirement is intended to protect the legitimate rights and interests of employees, customers, business partners, and creditors before the company ceases to exist as a legal entity.

In other words, if any outstanding obligations remain unresolved or any legal disputes are still pending, the dissolution process cannot be completed in accordance with the law.

Financial Obligations That Must Be Settled Before a Company Ceases Operations

Once a dissolution decision has been adopted, the company must liquidate its assets and use the remaining funds to satisfy its financial obligations in the order of priority prescribed by law.

The rights and interests of employees are given the highest priority. Outstanding salaries, severance payments, social insurance, health insurance, unemployment insurance contributions, and any other benefits provided under employment contracts must be fully paid first. Tax obligations owed to the State are settled next, followed by all other outstanding debts of the company.

Complying with this statutory order of payment not only ensures the legality of the dissolution process but also minimizes the risk of complaints or legal claims from interested parties.

Why Are Tax Obligations Often the Biggest Obstacle in Business Dissolution?

In practice, most delays in the dissolution process are not caused by business registration procedures but by unresolved tax matters.

Before completing the dissolution process, a company must file all outstanding tax declarations, pay any unpaid taxes, fulfill obligations relating to fees and charges, and properly handle invoices in accordance with applicable regulations. The tax authority will review the company’s records, reconcile relevant information, and verify that all tax obligations have been fully satisfied.

Only after confirming that no outstanding taxes or other financial obligations remain can the company proceed with the remaining dissolution procedures. This mandatory requirement ensures that the State’s revenue interests are fully protected before the company is officially dissolved.

Proper Dissolution Procedures Help Minimize Legal Risks

Business dissolution marks the end of a legal entity’s existence, but it does not automatically eliminate all legal responsibilities.

If the dissolution dossier is incomplete or outstanding financial obligations have not been fully resolved, the company’s managers may still bear legal liability under applicable laws. For this reason, reviewing outstanding debts, tax records, employment matters, and other related obligations before initiating the dissolution process is a crucial step in ensuring that the company’s closure proceeds smoothly, complies with legal requirements, and minimizes the risk of future disputes.

Conclusion

Business dissolution is a mandatory legal procedure for companies seeking to terminate their operations lawfully. To ensure that the process is completed efficiently, businesses should first determine whether they meet the statutory grounds for dissolution, satisfy all legal requirements, and fully settle every financial obligation, particularly tax liabilities.

If you require assistance with reviewing your records or obtaining legal advice on business dissolution procedures, Green NRJ is ready to support your business throughout the entire process, helping you save time, reduce errors, and ensure full compliance with current legal regulations.