Procedures for temporary suspension business of a joint stock company: Documents and notes

Procedure for temporary suspension business of a joint stock company is a necessary solution when a business encounters temporary difficulties or needs to restructure its business operations. Implementing the correct procedures helps the company maintain its legal status, avoid unnecessary tax obligations, and create favorable conditions to restart business operations after a temporary suspension without legal problems or administrative penalties.

Conditions for temporary suspension business of a joint stock company

A temporary suspension business of a joint stock company is a right of an enterprise as stipulated in the Law on Enterprise. Businesses can temporarily suspend operations when they encounter financial or market difficulties or need to restructure operations.

According to the provisions of Article 206 of the Law on Enterprise 2020 guided by Articles 66 and 67 of Decree 01/2021/ND-CP effective from January 4, 2021, enterprises have the right to temporarily suspend business but must notify in writing the Business Registration Authority where they are registered and the tax authority before suspending business. The business suspension period must not exceed 1 year. After the notification period expires, if the enterprise continues to temporarily suspend business, it must continue to notify the Business Registration Authority.

Before temporarily suspending business, the joint stock company needs to ensure the completion of tax obligations, social insurance and other financial obligations according to regulations. The company also needs to resolve labor issues according to the provisions of the Labor Code, including notifying employees of temporary suspension of operations and agreeing on salary and benefits during the temporary suspension period.

File for temporary suspension business of a joint stock company

To carry out business suspension procedures, joint stock companies need to prepare complete documents according to regulations. Preparing correct and complete documents will help the processing process take place quickly and smoothly.

According to Article 66 of Decree 01/2021/ND-CP, business suspension documents include:

• Notice of business suspension according to the form specified in Appendix II-19 of Circular No. 01/2021/TT-BKHDT.
• Valid copy of the meeting minutes on temporary business suspension of the Board of Directors.
• Original resolution and decision of the Board of Directors on temporary suspension of business.
• Original power of attorney to carry out suspension procedures and ID card/passport or documents of equivalent legal value of the authorized person (if any). Power of attorney does not need to be notarized or authenticated.

Note, for joint stock companies operating under an Investment License, Investment Registration Certificate (also Business Registration Certificate) or documents of equivalent legal value, submit the following additional documents:

• Valid copy of Investment License, Investment Certificate or documents of equivalent value;
• Valid copy of the company’s Tax Registration Certificate;
• Application for supplementing and updating business registration information (form Appendix II-14 issued with Circular 01/2021/TT-BKHDT).

Documents must be submitted no later than 03 working days before the date the company suspends business.

Procedures for temporary suspension business of a joint stock company

The process of implementing procedures for temporary suspension business of a joint stock company includes many steps, requiring accuracy and time compliance. Understanding the process will help businesses save time and effort. The specific process is as follows:

Step 1: Organize a meeting of the Board of Directors or General Meeting of Shareholders to pass a resolution on business suspension. The content of the resolution must clearly state the reason for the suspension, the start and end time of the suspension, and the plan to resolve related issues such as tax obligations, labor, and contracts with partners.

Step 2: Prepare documents to notify business suspension. The notice must clearly state the time and duration of temporary suspension of business operations, and be signed by the legal representative of the enterprise.

Step 3: Submit application for notice of business suspension at the Business Registration Office where the business is registered. Applications can be submitted directly to the One-Stop Department of the Department of Planning and Investment, via public postal services or electronically (National Information Portal on Business Registration).

Step 4: The Business Registration Office issues the Receipt, checks the validity of the dossier and issues a confirmation that the joint stock company has registered to temporarily suspend business within 03 working days from the date of receiving the valid dossier.

Step 5: The Business Registration Department performs:

• Update the legal status of the enterprise and the status of all branches, representative offices, and business locations of the enterprise in the National Database on Business Registration to a state of temporary business suspension.
• Send the business temporary registration information to the tax authority electronically through the information exchange system on business registration and tax registration within 01 working day or no later than the next working day from the date the business registration authority records it on the National Business Registration Information System.

CSPL: Point a Clause 1 Article 4 Decree 126/2020/ND-CP dated October 19, 2020.

Step 5: Notify the social insurance agency about the temporary suspension of compulsory social insurance payments for employees (if any) according to the provisions of Point a, Clause 1, Article 16 of Decree 115/2015/ND-CP dated November 11, 2015.

After completing the above steps, the joint stock company officially suspends business.

Note when temporarily suspending joint stock company business

The temporary suspension business of a joint stock company has many legal aspects that need to be kept in mind to avoid risks and ensure compliance with legal regulations. These notes help businesses avoid unwanted problems. Here are some important notes:

First, the business suspension period cannot exceed 1 year. In case an enterprise wants to continue to temporarily suspend business after the end of the notified period, it must carry out procedures for notification of continued business suspension before the end of the notified period.

Second, during the temporary suspension of business, businesses do not have to submit tax declarations, except in cases where taxpayers temporarily suspend operations or do business for less than a full month, quarter, calendar year or fiscal year, they still have to submit monthly and quarterly tax declarations; Annual settlement documents, except for cases where tax reporting is exempted according to tax laws.

In addition, businesses are not allowed to use invoices and do not have to submit invoice usage reports. In case an enterprise is approved by the tax authority to use invoices in accordance with the law on invoices, it must submit a tax declaration and submit a report on invoice use according to regulations.

Enterprises must comply with decisions and notices of tax administration agencies on urging debt collection, enforcing administrative decisions on tax management, inspecting and checking compliance with tax laws and handling administrative violations on tax administration according to the provisions of the Law on Tax Administration.

Third, businesses must fully fulfill their obligations to employees according to the provisions of the Labor Code. In case of temporary suspension of operations, the enterprise can agree with the employee to temporarily postpone the implementation of the labor contract, take unpaid leave or reduce salary.

Fourth, businesses must notify partners and customers about the temporary suspension of business to avoid unnecessary disputes or damages. Ongoing contracts need to be reviewed and have appropriate solutions.

Fifth, if an enterprise continues to operate and resume business on time as registered, it does not have to notify the agency where it has registered to temporarily suspend its operations and business according to regulations.

In case the enterprise resumes operations and business before the deadline, it must notify the agency where the temporary suspension of operation and business has been registered and must fully comply with tax regulations, submit tax declaration dossiers, and submit reports on invoice use according to regulations.

CSPL: Clause 2, Article 4, Decree 126/2020/ND-CP dated October 19, 2020.

Procedures for resuming operations after temporary suspension of business

After the business suspension period expires, the joint stock company can continue to operate normally or carry out procedures to resume operations if it wants to operate before the announced deadline. Returning to business operations requires compliance with legal regulations.

According to the provisions of Article 66 of Decree 01/2021/ND-CP, businesses can resume operations after temporarily suspending business before the announced deadline. In this case, the enterprise must notify the Business Registration Authority and the tax authority at least 3 working days before resuming operations.

Documents for notification of resumption of operations before the deadline sent to the Business Registration Authority include:

• Notice of business resumption before the announced deadline according to the form specified in Appendix II-19 of Circular No. 01/2021/TT-BKHDT.
• Authorization document for the person to submit the application and receive results if not the legal representative. This document is not required to be notarized or authenticated.
• CCCD/Passport or documents of equivalent legal value of the authorized person.

After the announced business suspension period expires, if the enterprise does not announce the continued suspension or does not announce the resumption of business before the deadline, the enterprise is considered to have automatically resumed operations.

Frequently asked questions about procedures for temporary suspension business of a joint stock company

Here are some frequently asked questions:

How long can a joint stock company temporarily suspend business?

According to the provisions of Article 206 of the Law on Enterprise 2020, the business suspension period cannot exceed 1 year. However, businesses can announce continued suspension after the end of the announced period.

Does a joint stock company have to pay taxes during the temporary suspension of business?

During the temporary suspension of business, enterprises must still submit periodic tax reports according to the provisions of tax law, unless exempted from submitting tax reports. However, businesses may not have to pay taxes if they do not generate revenue.

Can the business resume operations before the announced business suspension period?

Yes, businesses can resume operations before the announced deadline. In this case, the enterprise must notify the Business Registration Authority and the tax authority at least 3 working days before resuming operations.

How much does it cost to carry out procedures to temporarily suspend business of a joint stock company?

According to current regulations, business suspension procedures do not require payment of fees to the Business Registration Authority.

Can an enterprise authorize another person to carry out business suspension procedures?

Yes, businesses can authorize other individuals or organizations to carry out business suspension procedures through a legal authorization document.

During the temporary suspension of business, do businesses have to pay social insurance for employees?

During the temporary suspension of business, businesses and employees can agree to temporarily postpone the implementation of labor contracts. In this case, social insurance payments will be temporarily suspended according to the provisions of law on social insurance.

If the enterprise does not notify the temporary suspension of business, how will it be handled?

Enterprises that do not notify the temporary suspension of business may be subject to administrative sanctions according to the provisions of Decree No. 122/2021/ND-CP with fines ranging from 1,000,000 VND to 5,000,000 VND.

Can a business suspend business multiple times in a year?

Yes, an enterprise can temporarily suspend business multiple times in a year, but each temporary suspension must not exceed 1 year and must fully carry out notification procedures to the competent state agency.

During the temporary suspension of business, are businesses allowed to conduct business transactions?

No, during the business suspension period, businesses are not allowed to conduct business activities and issue invoices. Violations may result in administrative sanctions.

Are business suspension procedures different from business dissolution procedures?

Yes, business suspension procedures are different from business dissolution procedures. Temporary suspension of business is just a temporary cessation of operations for a certain period of time and the business still legally exists. Dissolving a business means ending the existence of the business.

Consulting services on procedures for temporary suspension business of a joint stock company

Long Phan Consulting Company provides consulting services on procedures to suspend business of joint stock companies with a team of experienced consultants. We help businesses carry out business suspension procedures quickly, accurately and in compliance with legal regulations.

Our services include:

• In-depth consulting related to temporary suspension business of a joint stock company.
• Drafting documents, resolutions, and decisions related to business suspension.
• Prepare documents to notify business suspension in accordance with regulations.
• Enterprise representatives submit documents to competent state agencies.
• Monitor application status and resolve arising problems.
• Consulting on tax, social insurance, and labor issues during business suspension.
• Support procedures for resuming operations after temporary business suspension.

With many years of experience in the field of business consulting, Long Phan Consulting Company is committed to providing customers with professional, effective, time and cost-saving services.

Conclude

The procedure for temporarily suspending business of a joint stock company is an important legal process that helps businesses temporarily suspend operations for a certain period of time to restructure or overcome difficulties. Customers need to pay attention to the suspension period, tax obligations, labor and other related issues. If you need assistance with procedures to temporarily suspend business of a joint stock company, please contact Long Phan Consulting Company via the hotline 1900636389 for detailed advice and support in carrying out necessary legal procedures.