Company Liquidation Services
Background and Challenges
When a Japanese company considers withdrawing from the Vietnamese market, it generally chooses between (i) withdrawal through M&A (sale of shares or the business) or (ii) withdrawal through dissolution of the legal entity (liquidation/dissolution procedures). ■ Cases in which withdrawal through dissolution of the legal entity is chosen When recovering the investment proves difficult, or the benefits of continuing the business have diminished, many companies choose to withdraw by dissolving the legal entity (liquidation/dissolution). In such cases, the common approaches adopted by many Japanese companies include: Retaining a small number of employees to handle the liquidation work Outsourcing the liquidation work to a tax and accounting firm These are indeed widely used approaches and can be effective to a degree, but they also carry the following risks and challenges. ■ Practical challenges in liquidation procedures The liquidation period tends to become prolonged In Vietnam, administrative procedures and tax verification take time, and it is common for the process to run longer than expected. An increase in cost is unavoidable The longer the period drags on, the more costs accumulate — personnel expenses, outsourcing fees, filing fees, and the like. Lack of experience among the employees handling the matter The employees left in charge are often unfamiliar with liquidation practice, which can result in missed procedures and tax risk. Risk of tax audit and additional tax assessment Because tax authorities conduct a rigorous review at the time of dissolution, any problems in past filings can give rise to the risk of additional tax assessment. Increasing complexity of administrative procedures Coordination is required with multiple government authorities (the Department of Investment, the Department of Planning and Investment, the tax authority, social insurance, the police, the Department of Industry and Trade, etc.), demanding both time and specialized expertise.
Why Clients Choose Us
2.1. An efficient process that shortens the liquidation period and eases the financial burden To minimize the financial burden your company incurs during liquidation, our firm prepares a proposal that sets out an efficient liquidation process in writing and optimizes the overall schedule. Through this, we aim to keep the period during which the company must be maintained — during which rent, personnel costs, and administrative expenses continue to accrue — to roughly two to three months. After that point, only the transfer of assets and the remaining administrative procedures need to be completed, allowing the liquidation to be finished quickly and according to plan. 2.2. Our firm handles all inquiries and reviews by government authorities (no need for you to maintain an office) During the liquidation process, multiple government authorities — the Department of Investment, the tax authority, social insurance, and the police, among others — may conduct inspections or reviews. Our firm handles all such inquiries, either at our own office or by bringing the necessary documents and dealing directly with the responsible officer. *Customs inspections relating to imports/exports, inventory, or re-exported assets are excluded. As a result, there is no need whatsoever for your company to maintain or prepare an office during the liquidation period. 2.3. Our firm handles all document preparation and submission on your behalf, minimizing the burden on your legal representative Liquidation requires the preparation, filing, and revision of a large volume of documents. Our firm handles all of this document preparation and submission work as your agent, on a comprehensive basis. Documents requiring a signature are organized by our firm and processed as follows: Sent as a batch to the head office in Japan Returned to our firm once signed Submitted to the relevant authorities As a result, your company's legal representative has no need to be present in Vietnam, substantially reducing the burden involved. 2.4. Delivering the best possible practical outcome, grounded in legal knowledge built through numerous liquidation matters In company liquidations, it is not uncommon for practical issues to come to light — inconsistencies in the books, past filing omissions, missing internal records, and the like. Drawing on our experience supporting the liquidation of numerous Japanese companies, our firm quickly identifies the legal measures needed to correct any deficiencies or inconsistencies and achieves the optimal procedure in full compliance with current law. Through a comprehensive perspective spanning legal, tax, and administrative procedures, we provide total support for a safe and reliable company liquidation.
Service Details
Process | Support Provided Preparatory Stage ① Pre-dissolution preparation and compliance review | Review of documentation covering the company's overall activities and examination of compliance with the Investment Law, tax law, Enterprise Law, customs law, and other relevant specialized legislation (e.g., regulations on offshore borrowing) Completing missing declarations and reports To the extent possible, completing any unfiled or amendable declarations and reports Consolidated handover and safekeeping of documents and supporting records Collecting and organizing the documents required for the dissolution procedure based on a checklist *Particular care and thorough verification are required regarding tax and other financial obligations, as well as compliance obligations where a violation could lead to sanctions such as fines or penalties. Wherever possible, it is important to prepare sufficient supporting evidence in advance and to build an appropriate explanation and defense strategy for dealing with the relevant authorities. Working together with our audit team, our firm verifies and completes these matters, making every effort to review and organize the relevant content. ② Support with labor-related matters | Support in negotiating the termination of employment with employees We provide legal support for discussions and negotiations aimed at terminating employment contracts by mutual agreement. Support with procedures relating to severance pay and compensation, where necessary This includes calculating severance pay, determining payment standards, and preparing internal documents. Advice and support on other matters arising under labor-related laws generally This includes reporting to the labor authority, social insurance procedures, and responding to objections raised by employees. *Entering into a mutual termination agreement is intended to reduce the time burden associated with formal disciplinary decisions or administrative procedures, while also limiting the company's financial burden by securing the employee's voluntary cooperation. However, where a mutual termination agreement cannot be reached, or where such an agreement would impose an excessive financial burden on the company (for example, a demand for a large severance payment or allowance), our firm will support a transition to unilateral termination of the employment contract on the grounds of restructuring or economic necessity. In that case, the relevant severance pay and allowances must be calculated and paid in accordance with the provisions of labor law. ③ Asset disposal support | Verification of asset ownership status and preparation of a disposal plan and explanatory materials Support in searching for prospective transferees of land-use rights, buildings on the land, and other assets Advice on and attendance at transfer negotiations Support in drafting and executing the transfer agreement and related documents Implementation of other ancillary procedures relating to the disposal of assets ④ Performance and settlement of receivables and payables | Review and verification of receivables and payables Settling debts and carrying out contract-liquidation procedures for unsettled contracts Providing notice to, and coordinating with, relevant parties other than government authorities ⑤ Other preparatory support | Support in negotiating and discussing the contractual relationship with the company's liquidation team (in-house staff responsible for tax, labor, import/export, etc.) after their employment contracts end Liaison, coordination, and information-sharing with the liquidation team, kept to the minimum necessary scope Implementation Stage ⑥ Preparation of internal procedural documents relating to dissolution and administrative filing | Preparation of internal resolution documents such as the dissolution resolution and minutes of the members'/shareholders' meeting Preparation of a plan and explanatory statement covering the settlement of the company's debts and obligations Preparation of a statement confirming that the notification obligation to interested parties has been fulfilled Submission of the dissolution resolution and accompanying documents to the relevant authorities ⑦ Handling of administrative matters | Responding to inquiries and reviews from various government authorities (e.g., the Department of Finance, the State Bank, the tax authority, the social insurance agency, etc.) Handling administrative matters includes providing oral and written explanations and representations, preparing explanatory materials and related documents, and carrying out cooperation and supplementary procedures in response to requests from each authority. Completion Stage ⑧ Support in completing liquidation (deliverables) | Completion of the tax-code closure procedure Completion of the procedure to terminate the investment project (invalidation of the IRC, etc.) Closure of bank accounts, cancellation of the digital signature, and disposal of unused invoices Completion of the company's final business termination and the procedure to deregister the enterprise