The parent company and its subsidiaries are considered to have extremely close relationships, so when the parent company dissolved, many subsidiaries also struggled and tried to continue. sustainably continue production and business activities or may have to be dissolved. In this article, we provide legal solutions so that the subsidiary can continue production and business when the parent company is dissolved.
Under Clause 1, Article 189 of the 2014 Enterprise Law, a company is considered a parent company of another company in one of the following cases:
– Owning more than 50% of charter capital or total common shares of that company;
– Having the right to directly or indirectly decide to appoint a majority or all members of the Board of Directors, Director or General Director of that company;
– Having the right to decide on amendments and supplements to the charter of that company.
When the parent company dissolves, how will the subsidiary sub-company handle?
According to Clause 1, Article 190 of the 2014 Law on Enterprises, depending on the legal type of a subsidiary, the parent company will exercise its rights and obligations as a member, owner or shareholder. east in relations with subsidiaries. Therefore, in the case of the parent company dissolution, some consequences will have for the subsidiary as follows:
Firstly: Deal with the holding of the parent company in the subsidiary
According to Article 54 of the 2014 Enterprise Law, when the parent company is dissolved, the capital contribution of the parent company can be resolved in two ways:
Method 1: Transfer to another person
When transferring to another person, the subsidiary company must carry out the procedure for changing member / shareholder information of the company.
Method 2: Ask the company to buy back
Subsidiaries to redeem capital contributions need to follow the procedures for registration of reduction of charter capital corresponding to the repurchase and change the information of member / shareholder of the company at the business registration office.
Second: Change in the number of members of subsidiaries
According to Article 201 of Enterprise Law 2014 as follows:
Article 201. Cases and conditions for dissolution of enterprises
Enterprises are dissolved in the following cases:
a) The operation duration stated in the company’s charter expires without a decision to extend it;
b) According to the decision of the owner of the enterprise in respect of a private enterprise, of all general partners, for a partnership, of the Members’ Council, of the company owner, for a limited liability company, of the General Meeting of Shareholders for joint stock companies;
c) The company no longer has the minimum number of members prescribed by this Law for 6 consecutive months without carrying out procedures for conversion of enterprise type;
d) The certificate of enterprise registration is revoked.
An enterprise may only be dissolved when it guarantees to pay all debts and other property obligations and it is not in the process of settling disputes at a court or an arbitration body. Relevant managers and enterprises prescribed at Point d, Clause 1 of this Article are jointly responsible for the debts of the enterprises.
According to the above provision, in case the parent company is a member / shareholder dissolves and the subsidiary does not have the minimum number of members, the subsidiary must carry out procedures to change the type of company accordingly. .
In case, if within 06 consecutive months from the time of insufficient number of minimum members / shareholders, the subsidiary does not carry out procedures for conversion of enterprise type, the subsidiary must proceed with dissolution.
Legal grounds:
– Enterprise Law 2014
– Decree 78/2015 / ND-CP on enterprise registration
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