Termination of Business under current Vietnamese law

Nguyen Van Huong. This is a case that was re-tried at first instance because the first instance judgment No. 06/2006/DSST of the People's Court of Hoang Mai District, the appeal judgment No. 208/2006/DSPT of the People's Court of Hanoi City was annulled according to the Chief Justice Decision No. 503/2009/DS-GDT. In this case, Mr. Huong was the guarantor for the Viet Han Production - Import Export Company Limited. According to the business registration, this company had two members, but when the member who was the legal representative of the company died, and the Court summoned the remaining member to participate in the case, it was discovered that the documents were fake; the signature appraisal results of the Institute of Forensic Science were also helpless because the two signatures were different. A similar case was accepted by the Hanoi People's Court under case number 44/2009/TLST-KDTM on March 10, 2009, but after more than two years it still could not be resolved due to falsification in the business registration documents.

Theoretically, there has been no official explanation of the doctrine and philosophy hidden in the regulations on the minimum number of shareholders/members. Some explanations such as “one tree cannot make a forest, three trees together can make a high mountain” or the biblical explanation of the durability of a rope made from three strands, are merely literary.

For LLCs and Joint Stock Companies, the liability of members and shareholders is only within the scope of their contributed capital. Once they have contributed enough capital, they are no longer liable for the assets. Therefore, it is necessary to amend the dissolution procedures due to the revocation of the Business Registration as follows:

In case an enterprise has its Business Registration Certificate revoked, the enterprise must dissolve within six months from the date of revocation of the Business Registration Certificate.

Within the statutory time limit, if the business registration authority does not receive the enterprise dissolution dossier, the enterprise shall be considered dissolved and the business registration authority shall remove the enterprise's name from the business registration book. In this case, the legal representative, members of the Board of Directors for joint stock companies, and general partners for partnerships shall be jointly liable for debts and other unpaid property obligations.

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3.2.1.2. Supplementing regulations on the right to request and procedures for resolving requests to declare invalid transactions that violate prohibitions upon dissolution

Article 159 of the 2005 Enterprise Law stipulates: From the date of the decision to dissolve an enterprise, enterprises and enterprise managers are strictly prohibited from performing the following activities: Concealing or dispersing assets; Giving up or reducing the right to claim debts; Converting unsecured debts into debts secured by the enterprise's assets; Signing new contracts that are not contracts for the purpose of dissolving an enterprise; Pledge, mortgage, donate, or lease assets; Terminating the performance of effective contracts; Mobilizing capital in any other form. However, the Law does not stipulate sanctions when violations are detected. As analyzed, the above prohibitions are mostly prohibitions for civil transactions. Therefore, it is necessary to stipulate the subjects who have the right to request a declaration of invalidity and set out a simplified settlement procedure as follows:

When discovering that an enterprise has violated the provisions of Article 159 of the Enterprise Law in establishing transactions, creditors have the right to request the Court to declare the enterprise's transactions invalid. The Court shall resolve the request to declare the transaction invalid in this case within one month from the date of acceptance.

Regarding the act of concealing assets. This prohibition is also stipulated by the Bankruptcy Law. The purpose of the act is to appropriate the assets under one's management, this act has signs of crime. Therefore, there should be regulations to prosecute criminal liability.

3.2.1.3. Supplementing regulations on handling violations of dissolution records

Normally, when setting out the conditions and legal procedures for an entity to perform a certain task, the legislator must consider inspection and control. However, in the field of business registration, the registrant must be responsible for the honesty and accuracy of the content of the business registration dossier. Dissolution that does not comply with the legal conditions and procedures can have a negative impact on public order, social morality, creditors, and employees. When we loosen the input procedures to implement administrative reforms, creating favorable conditions for investors, investors may forge for some purpose or creditors may not detect it. Therefore, when detected, sanctions must be applied. Invalidating the dissolution of enterprises is an important sanction to gradually standardize business registration activities and protect the legitimate rights of third parties, as well as ensure public order.

3.2.1.4. Amendment and supplement of regulations on prohibited acts in bankruptcy

In the current Bankruptcy Law, the provisions of Article 43 cover the provisions of Article 31 and are more stringent and strict. And in terms of law, the sanctions applied to both cases are the same, both are to resolve invalid contracts. Therefore, in terms of legislative techniques, and to avoid misunderstandings or intentional misunderstandings when applying, it is necessary to abolish the prohibition provisions in Article 31 and prescribe a special procedure for resolving requests for declaration of invalidity during the bankruptcy settlement process to ensure effective regulation.

3.2.2. Implementation solution

3.2.2.1. Propagating and collecting legal regulations

Propagating and educating the law is one of the important tasks to ensure the law is enforced. Reality has proven the thought of President Ho Chi Minh that having laws is not enough, the important thing is that the law of the state must enter into life, must become the voluntary activity of each person in society.

Legal education and propaganda have a great impact on state management activities and the implementation of basic rights of citizens in general and freedom of business in particular. However, the information provided to people and traders should be collected in a simple, complete and easy-to-understand form. Normally, the conversion of company forms is regulated in many different laws, so access can be limited. Therefore, it requires propaganda agencies to collect them in a document in the most accessible form.

3.2.2.2. Innovation and improvement of the quality of staff and civil servants

Innovation and improvement of the quality of cadres and civil servants are of great significance, contributing to ensuring the enforcement of laws and policies of the State, ensuring the legitimate rights and interests of the subjects. In terms of law, innovation and improvement of the quality of cadres and civil servants is identified as one of the four reform contents in the overall program of state administrative reform in the period 2001-2010. Training and development of cadres and civil servants has been specified by the Government in Decree No. 18/2010/ND-CP dated March 5, 2010.

Staff and civil servants handle work in the field

area

this must be

equipped with legal knowledge, not just business law

but also knowledge of civil law in the broad sense. In fact, without knowledge of civil law, it is difficult to handle or handle incorrectly related cases.

3.2.3. Judicial solutions

3.2.3.1. Courts need to strengthen the interpretation of laws and the creation of precedents.

Up to now, Vietnamese judges have not had the right to interpret the law but only the authority to apply the law. While the independence of judges can be understood to include the independence of applying the law in specific cases when the written law has not yet regulated it. Furthermore, judges also have the right to interpret the law on the basis of regulatory purposes, fairness, and professional ethics, because they have the right to make judgments on the legality of human behavior. To be fair, the right to interpret the law and create laws based on fairness are innate powers of judges. When these powers are not given to judges, the protection of property rights and contracts will probably encounter many difficulties.

Market economy promotes the emergence of complex and ever-new social relations, while lawmakers cannot fully convey these relations into law, but disputes from there continue to arise and need to be resolved. Therefore, the law needs to be interpreted for specific cases and thus precedents are formed to be used for similar disputes that occur later.

In reality, there are many values that need to be protected from the impact of business termination. These values can be very abstract, making it difficult to quantify. Positive law always contains abstract terms and general principles that make it difficult to resolve arising problems, while in practice, all problems need to be resolved.

decide specifically and accurately. In our country, in theory, precedents are not a source of law, however, the Supreme People's Court - represented by the Council of Judges - has guidelines drawn from trial experience, summary reports ... which are somewhat valuable for lawyers and judges in the litigation process. Thus, to a certain extent, it also has certain values. In reality, it is clear that precedents increasingly have a certain influence on the direction of settlement of judges, and furthermore, influence the Vietnamese legal system itself. This is not surprising when legal documents today have a great influence in countries with a common law system. In a common law system, the law originates from precedents. Legal documents are not absent but are often considered exceptions and are only interpreted more narrowly by the Court. Case law and common law do not use abstract terms or set forth general principles – legal norms are presented in very specific language to address very specific issues.

Recognizing the role of precedents in regulating social relations in a way that harmonizes public and private interests, the Politburo issued Resolution No. 48/NQ-TW dated May 24, 2005, on building and perfecting the legal system by 2010 and orientation to 2020, which identifies the following tasks:

Research on the development of case law and the ability to exploit and use case law, customs (including international trade customs and practices), and rules of professional associations, contributing to supplementing and perfecting the law (section 1.7) [5].

To create good precedents in the corporate sector, it is necessary to simultaneously combine the selection of exemplary judgments and decisions that have been issued and the updating of them.

Regularly update subsequent judgments and decisions. When there is a suggestion of unfairness or inaccuracy regarding one or more decisions or judgments, the review must be conducted immediately to ensure objectivity, accuracy and fairness.

3.2.3.2. Carry out summary proceedings to resolve requests to declare transactions invalid related to the dissolution and bankruptcy of enterprises.

The implementation of simplified litigation procedures to adjudicate requests to declare transactions violating prohibitions during the process of enterprise dissolution and bankruptcy is very important, contributing to ensuring the legitimate rights and interests of third parties and protecting public order.

Therefore, there is a need for regulations on simplified litigation procedures, ensuring simple procedures and short time limits to resolve requests for invalidation of the above transactions. This regulation becomes an effective tool for creditors to protect their legitimate rights and interests, thereby contributing to a healthy business environment.

CONCLUDE

Economic development and global integration have impacted the establishment and termination of enterprises, which are increasingly carried out by groups of enterprises in the domestic economic sector and enterprises with foreign investment capital. However, in reality, the termination of enterprises is still very difficult. This is mainly due to the lack of legal regulations, unclear and specific regulations, and overlapping procedures. In addition, enterprises do not clearly understand the legal nature and characteristics of enterprise termination, often due to lack of legal knowledge. Therefore, it leads to disputes about enterprise termination.

Based on the research and evaluation of Vietnamese legal regulations, the author has proposed a number of solutions to overcome difficulties and shortcomings in order to perfect the legal framework for business termination. The author hopes to contribute to the improvement of the above legal regime, building a theoretical and practical basis to serve the research and study of individuals and organizations.

Termination of Business under current Vietnamese law - 9

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