Legal guidelines on the procedures for termination of investment projects and dissolution of enterprises

In the context of a volatile business environment, numerous enterprises – including large corporations and foreign investors – are compelled to make difficult decisions, namely, to terminate an investment project or to proceed with the dissolution of the enterprise. Such decisions do not merely signify the conclusion of a business endeavor but constitute a complex legal process that requires strict compliance in order to mitigate risks relating to legal liability, financial obligations, and corporate reputation. It is a common misconception among many managers that dissolution is simply equivalent to filing an application for cessation of operations; in reality, this process entails a wide range of mandatory procedures, including the liquidation of assets, settlement of contractual obligations, termination of employment relationships, tax finalization, and the fulfillment of financial obligations owed to the State and other relevant stakeholders. Any omission or error during implementation may give rise to protracted legal disputes or even criminal liability in cases involving debt concealment or violations of financial obligations.

When should an enterprise proceed with the termination of an investment project? What are the procedural steps that must be observed? And what are the key legal considerations that managers must pay particular attention to to ensure a safe and cost-efficient divestment process? This article provides an in-depth analysis of the legal grounds, procedural requirements, and practical recommendations, thereby enabling enterprises and investors to approach this significant decision with greater clarity and preparedness.

1. Cases in which an investor may terminate an investment project

The termination of an investment project may arise from the subjective decision of the enterprise or may constitute a mandatory action under the law, in cases where certain conditions prescribed by investment and enterprise regulations are not satisfied after the project has been established. Some typical cases of investment project termination are as follows:

First, the investor may independently decide to terminate the project. This falls within the scope of the investor’s freedom of business, allowing them to proactively discontinue the project when it is no longer financially viable, does not align with the business strategy, or in response to changes in the market.

Second, termination may occur pursuant to conditions set forth in contracts or the company’s charter. In practice, many projects are implemented on the basis of investment cooperation agreements, BOT or BCC contracts, or capital contribution agreements. When one of the parties breaches its commitments, or when pre-determined conditions arise, the parties may decide to terminate the project. Such cases often give rise to disputes, requiring the involvement of arbitration or courts to determine liability and allocate rights and benefits.

Third, upon the expiration of the project’s operating term. This occurs when the project reaches the term limit prescribed by law, at which point the enterprise may choose either to apply for an extension of the operating term or to terminate the investment project. This legal mechanism allows the competent authority to assess the project’s lifecycle and to re-evaluate the investment’s effectiveness before permitting an extension in cases where the enterprise seeks to continue operations.

The termination of a project, regardless of the form described above, requires the enterprise to fully discharge all investor obligations during the project’s implementation period, including timely capital contributions, comprehensive investment reporting, and full compliance with tax obligations. Any shortcomings on the part of the enterprise must be rectified prior to the competent authority’s consideration of the project’s termination. Certain violations may be referred to the inspection or supervisory department for resolution before the termination request is further reviewed.

2. Dissolution of the enterprise

Enterprise dissolution constitutes a final legal decision, marking the termination of the legal entity and all business activities. Unlike temporary suspension of operations or the termination of an investment project, dissolution involves the liquidation of assets, the termination of relationships with partners, clients, and employees, and strict compliance with the  Law on Enterprise.

First, dissolution due to the expiration of the operating term or by internal decision. When the company’s charter specifies a limited operating term without provision for extension, or when the owner, the members’ council, or the general meeting of shareholders adopts a resolution to terminate the enterprise, the company has the right to proactively “withdraw.” This reflects the exercise of the right to self-determination, while also serving as a test of governance capacity, as the enterprise must demonstrate transparency throughout the entire liquidation process.

Second, mandatory dissolution due to violation of legal existence requirements. Law on Enterprise stipulates that a limited liability company must have at least one member, a partnership must have at least two general partners, and a joint-stock company must have at least three shareholders. If these minimum numbers are not maintained for a continuous period of six months without conversion to another type of enterprise, the company is required to dissolve. This mechanism is designed to safeguard the legal character of the enterprise and to mitigate the risk of abuse of the corporate form.

Third, dissolution due to the revocation of the Enterprise Registration Certificate. This constitutes a form of “compulsory termination” applied when the enterprise commits serious legal violations, such as falsifying documents, engaging in prohibited business activities, or failing to fulfill tax obligations. Dissolution in this context is typically punitive in nature and is closely associated with the personal liability of the management.

Thus, enterprise dissolution is not a simple procedure but a rigorous legal process requiring careful preparation across financial, human resources, and legal documentation aspects. Any subjective or negligent approach may turn the dissolution decision into a dispute, adversely affecting the investor’s reputation and liability.

3. Procedures for enterprise dissolution

In order to carry out the dissolution procedure, the enterprise must observe the following basic steps:

Step 1: Notify the dissolution decision to the Department of Finance at the location of the company’s head office

Within seven (07) working days from the date of adoption of the dissolution resolution or decision, the enterprise shall submit the following documents to the provincial-level Business Registration Authority where the company’s head office is located:

• The dissolution resolution or decision of the owner in the case of a private enterprise; of the owner of a single-member limited liability company; of the Members’ Council in the case of a multi-member limited liability company or a partnership; or of the General Meeting of Shareholders in the case of a joint-stock company regarding the dissolution of the enterprise;
• The minutes of the Members’ Council meeting for a multi-member limited liability company or a partnership; or of the General Meeting of Shareholders for a joint-stock company regarding the dissolution of the enterprise;
• The debt settlement plan, if any.

Step 2: Submit the tax code termination dossier to the competent Tax Authority

Within three (03) working days from the date of receiving the dissolution notification, the Business Registration Office shall forward the information regarding the enterprise’s dissolution to the Tax Authority. At this stage, the enterprise shall submit the tax code termination dossier, which includes:

• A written request for the termination of the tax code
• A copy of the enterprise dissolution decision;
• Note: Before the tax code can be terminated, the enterprise must ensure the fulfillment of the following obligations:
• Complete all invoicing obligations in accordance with the Law on Invoices
• Complete all tax declaration and payment obligations, as well as the settlement of overpaid taxes or unclaimed value-added tax (if any), in accordance with Articles 43, 44, 47, 60, 67, 68, 70, and 71 of the Law on Tax Administration with the competent Tax Authority, including any obligations under a substituted tax code (if applicable).
• In the case of enterprises with dependent units, all dependent units must complete the tax code termination procedure before the tax code of the parent unit can be terminated.

Step 3: Submit the investment project termination dossier to the Department of Finance (in cases where an Investment Registration Certificate is issued)

Within fifteen (15) working days from the date of adoption of the decision to terminate the investment project, the enterprise shall submit the following documents to the Investment Registration Authority where the enterprise’s head office is located:

• A written notice of the termination of the investment project;
• The original Investment Registration Certificate;
• The decision to terminate the investment project.

The investment registration authority shall notify the relevant agencies of the termination of the investment project.

Step 4: After completing Step 2 and Step 3, the enterprise shall submit the enterprise dissolution registration dossier to the Department of Finance at the location of the company’s head office.

Note:

• Before submitting the enterprise dissolution registration dossier, the enterprise must complete the procedures for terminating the operations of its branches, representative offices, and business locations with the provincial-level Business Registration Authority where such branches, representative offices, or business locations are located.
• For enterprises using seals issued by the public security authorities, the enterprise is responsible for returning the seal and the Certificate of Seal Registration to the competent public security authority in accordance with the regulations.

Within five (05) working days from the date of full settlement of all corporate debts, the enterprise shall submit the enterprise dissolution registration dossier to the provincial-level Business Registration Authority, including a notice of enterprise dissolution, the enterprise’s asset liquidation report, and a list of creditors with the amounts of debts fully settled, including the settlement of all tax obligations and contributions to social insurance, health insurance, and unemployment insurance for employees following the enterprise dissolution decision, if any.

Within five (05) working days from the date of receipt of the enterprise dissolution registration dossier, the provincial-level Business Registration Office shall update the legal status of the enterprise in the National Business Registration Portal (“NBRP”) to “dissolved” if no objection is received from the Tax Authority or if the Tax Authority confirms that the enterprise has fulfilled all tax obligations. Simultaneously, the Business Registration Office shall publish a notice of the enterprise’s dissolution on the NBRP. In cases where the Tax Authority issues an objection due to the enterprise’s failure to fulfill its tax obligations as required by law, the provincial-level Business Registration Office shall notify the enterprise accordingly.

In summary, the termination of an investment project or the dissolution of an enterprise is not merely an administrative procedure. Without thorough preparation in legal, financial, and human resources aspects, such decisions may turn into a prolonged “crisis,” accompanied by risks of disputes, asset losses, and damage to the enterprise’s market reputation. Therefore, throughout the project’s operation, enterprises should establish compliance management systems to anticipate all possible scenarios, including project termination or enterprise dissolution.

Time of writing: 24/08/2025

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