Procedures for dissolution of branches of joint stock companies

Procedures for dissolution of branches of joint stock companies is a strategic step to help businesses restructure their operating systems, optimize resources and cut unnecessary operating costs. This process not only helps the company focus on key markets but also ensures compliance with legal regulations and avoids legal risks arising. The following article analyzes in detail the procedures and processes for branch dissolution that a joint stock company needs to carry out.

When is a branch of a Joint Stock Company dissolved?

A branch, as defined in Clause 1, Article 44 of the Law on Enterprises 2020, is a dependent unit of an enterprise, responsible for performing all or part of the functions of the enterprise, including the function of authorized representation. The branch’s business line must be consistent with the enterprise’s business line.

Branch dissolution arises when a business needs to restructure or narrow its scope of operations. A branch of a joint stock company may be dissolved in the following specific cases:

• According to proactive decisions from the joint stock company when it is deemed that maintaining the branch is no longer consistent with the business strategy;
• According to the administrative decision of the competent state agency on revocation of the branch operation registration certificate;
• When the declared content in the branch operation registration dossier is discovered to be fake;
• When the branch stops operating for 01 year without notifying the Business Registration Office and the Tax Authority;
• According to the decision of the Court or request of the competent authority according to the provisions of law.

The law clearly stipulates in Article 213 of the Law on Enterprises 2020 the obligations of enterprises when dissolving branches. Accordingly, the joint stock company must fulfill all obligations to tax authorities, perform contracts, pay debts including tax debt of the branch, and at the same time resolve legal rights for employees according to the provisions of labor law.

Procedure for dissolution of branches of joint stock companies

The process of dissolution of branches of joint stock companies requires enterprises to carry out procedures according to current regulations. Enterprises need to clearly understand the following information so that the dissolution process can take place effectively and quickly.

Complete tax obligations, submit application for tax code termination

According to the provisions in Clause 1, Article 72 of Decree 01/2021/ND-CP, the first step in the process of dissolving a joint stock company branch is to complete tax obligations, finalize taxes, carry out procedures to terminate tax codes and complete all financial obligations to the State. This must be done before submitting the branch dissolution application at the Business Registration Office.

Pursuant to the provisions of Clause 2, Article 14 of Circular 86/2024/TT-BTC, to carry out procedures for terminating tax code, joint stock companies need to prepare and submit the following documents at the Tax Department where the branch is operating:

• Written request for invalidation of tax code, form No. 24/DK-TCT;
• Copy of Decision to terminate branch operations or Notice of termination of operations of the managing unit;
• Copy of the decision to revoke the branch operation registration certificate of the competent state agency;
• Tax registration certificate (original) or Official letter explaining the loss of Tax registration certificate in case of loss of the original;
• Document confirming completion of tax obligations for import-export activities from the General Department of Customs (if the company has import-export activities);
• Official letter confirming no tax debt (depending on each tax department).

The process of processing tax code termination documents is as follows:

Step 1: Prepare documents and appraise documents:

Within 2 working days after receiving the dossier, the tax authority will update the branch’s status on the tax registration system to “Taxpayer ceases operations but has not completed the procedures for terminating the tax code”.

Step 2: Complete tax obligations:

After the branch completes its tax payment obligation, within 3 working days, the tax authority will send a notice to the taxpayer to terminate the validity of the tax code.

Step 3: Receive notifications:

This notice is an important document to continue carrying out branch dissolution procedures at the Business Registration Office.

Application for dissolution of a joint stock company branch

After completing the procedure to deactivate the tax code, the joint stock company needs to prepare a branch dissolution document to submit to the Business Registration Office. According to the provisions of Article 72 of Decree 01/2021/ND-CP, the branch dissolution dossier includes the following official documents:

• Notice of branch dissolution (according to form at Appendix II-20 issued together with Circular 01/2021/TT-BKHDT);
• Decision and copy of meeting minutes of the Board of Directors of the joint stock company on termination of branch operations;
• Documents of the person authorized to perform the procedure (if any) include: Power of attorney and personal identification documents (Copy of valid ID card/Citizen identification card/Passport).

The Board of Directors’ decision to dissolve a branch must clearly state the following basic contents:

• Information about the joint stock company (name, business code, head office address);
• Information about the dissolved branch (name, code, address);
• Reason for branch dissolution;
• Plan for handling assets, contractual obligations, debt and labor of the branch;
• Time of termination of branch operations;
• Signature of the legal representative of the joint stock company.

Minutes of the Board of Directors meeting must fully show the discussion and voting process to approve the dissolution of the branch, ensuring the approval voting rate according to the provisions of the Company Charter and the Law on Enterprise.

Procedure for applying for dissolution of branches of joint stock companies

After completing the preparation of documents, procedures for dissolution of branches of joint stock companies are carried out according to the provisions of Article 72, Decree 01/2021/ND-CP including the following main steps:

Step 1: Submit application for branch dissolution

A joint stock company must submit documents to the Business Registration Office where the branch operates within 10 days from the date of decision to terminate branch operations. Companies can choose one of the following application submission methods:

• Submit directly to the Business Registration Office – Department of Planning and Investment where the branch operates;
• Submit your application online through the National Business Registration Portal (https://dangkyquamang.dkkd.gov.vn) by personal digital signature or business registration account;
• Submit the application by mail to the address of the Business Registration Office – Department of Planning and Investment where the branch operates.

Currently, some cities only accept online applications, businesses need to check carefully before submitting their applications.

Step 2: Receive and process documents

After receiving the branch dissolution dossier, the Business Registration Office and the tax authority will coordinate to verify the status of the branch’s tax obligations within 02 working days. This coordination is to ensure that the branch has fulfilled its financial obligations to the State before officially terminating its operations.

Step 3: Receive the results of branch dissolution

If no refusal is received from the Tax Authority, the Business Registration Office will terminate the branch’s operations in the business registration system and issue a notice of branch termination within 05 working days from the date of receipt of valid documents.

A joint stock company can receive the branch dissolution results by the registered method when submitting the application (directly, by post or online). As a result, the Notice of Termination of Branch Operations was issued by the Business Registration Office, confirming the branch’s official termination of operations.

After receiving the notice of termination of branch operations, the joint stock company needs to store this document in the enterprise’s legal records to serve future inspection and examination activities.

>>> See more: The process of dissolving a company branch is quick and economical.

Notes when dissolving a branch of a Joint Stock Company

When carrying out procedures for dissolution of branches of joint stock companies, businesses need to pay special attention to the following issues to avoid legal risks and ensure the dissolution process goes smoothly. Strict compliance with legal regulations will help businesses save time, costs and avoid arising problems.

First, complete financial and legal obligations:

Before dissolving a branch, businesses need to ensure full payment of debts, including tax obligations and other financial obligations to the State. At the same time, businesses must complete the contracts signed with customers, partners, suppliers or have appropriate transfer plans.

In addition, the settlement of employee benefits according to the provisions of the Labor Code is mandatory, including items such as severance pay, social insurance, health insurance and unemployment insurance.

Second, handle issues related to digital signatures and bank accounts:

After completing the dissolution procedures for the independent accounting branch, the enterprise needs to contact the service provider to delete the branch’s digital signature. At the same time, closing a bank account is necessary after completing financial obligations.

To ensure transparency and maintain business relationships, businesses should also clearly notify partners and customers about the branch’s termination of operations, as well as update new contact methods.

Third, strictly comply with the timelines for dissolution documents:

Joint stock companies need to pay attention to the deadline for submitting branch dissolution documents, specifically within 10 days from the date of the decision to terminate operations. The tax authority will update the branch status within 2 working days of receiving the dossier, and send a notice of tax code termination within 3 working days after the business completes its tax obligations.

Finally, the Business Registration Office will process the documents and issue an official notice of termination of branch operations within 5 working days of receiving the valid documents.

Complying with these timelines helps the branch dissolution process take place quickly and effectively, avoiding unnecessary tax obligations.

Consulting services and support for dissolution of branches of joint stock companies at Long Phan Consulting Company

Dissolving a joint stock company branch requires legal understanding and practical experience to ensure the process goes smoothly. Long Phan Consulting Company provides professional consulting services, supporting businesses in fully implementing branch dissolution procedures in accordance with current law.

Long Phan Consulting Company’s comprehensive consulting and support services include:

• Analyze the status of the branch before dissolution;
• Consulting on tax obligations, obligations to employees and other related issues;
• Develop a branch dissolution roadmap suitable to the characteristics of each enterprise;
• Draft necessary documents such as dissolution decisions, Board of Directors meeting minutes, notices,…;
• Support your business in preparing and submitting tax finalization reports;
• Prepare and submit tax code termination documents, monitor and urge tax authorities to process documents on time;
• Enterprise representative submits dissolution documents to the Business Registration Authority;
• Receive results and resolve arising problems (if any).

With a team of experienced and knowledgeable experts, Long Phan Consulting Company is committed to supporting businesses in implementing branch dissolution procedures quickly, effectively, in accordance with legal regulations, helping businesses save time and costs.

Frequently asked questions

Below are frequently asked questions about procedures for dissolution of branches of joint stock companies.

What circumstances lead to the termination of operations of a joint stock company branch?

A branch of a joint stock company can stop operating according to the company’s proactive decision, an administrative decision to revoke the certificate, detection of fake registration documents, a one-year shutdown without notice, or according to a decision of the Court.

What responsibilities does a joint stock company have when a branch is dissolved?

The joint stock company is obliged to complete all tax obligations, perform contracts, pay debts (including tax debts of branches), and resolve legal rights for employees.

What is the first procedure in the branch dissolution process?

The first step is to complete tax obligations and carry out procedures for terminating the tax code at the Tax Department where the branch operates.

What documents are included in the branch’s tax code termination application?

The dossier includes a written Notice of request for invalidation of tax code, original Tax Registration Certificate (or written explanation if lost), copy of Decision or Notice of termination of branch operations, written confirmation of completion of import-export tax obligations (if any), and official letter confirming no tax debt (depending on the tax department).

How long does it take for the tax authority to process a tax code termination application?

Within 2 working days of receiving the dossier, the tax authority will update the status. After completing tax obligations, within 3 working days, the tax authority sends a Notice of tax code termination.

What does an application for branch dissolution submitted to the Business Registration Office include?

Records include Notice of branch dissolution (according to form), Decision and copy of Board of Directors meeting minutes on termination of operations, and records of authorized persons (if any).

What content must be clearly stated in the decision to dissolve a branch by the Board of Directors?

The decision must state company and branch information, reason for dissolution, asset disposal plan, obligations, termination date, and signature of the legal representative.

How long does it take for a joint stock company to submit a branch dissolution application?

Joint stock companies must submit documents within 10 days from the date of decision to terminate branch operations.

What methods does a joint stock company have to submit branch dissolution documents?

Companies can submit directly, online through the National Business Registration Portal, or by mail.

How long does it take for the Business Registration Office to process branch dissolution documents?

If there is no refusal from the tax authority, the Business Registration Office will terminate operations and issue a notice within 5 working days from the date of receipt of valid documents.

Conclude

Dissolution of branches of joint stock companies is a complicated procedure that requires strict compliance with legal regulations. Long Phan Consulting Company commits to accompanying businesses throughout the process from completing tax obligations to submitting documents at the business registration agency. Customers who need in-depth support regarding the dissolution of a joint stock company branch, please contact the hotline: 1900636389 for in-depth advice and maximum support.