The following article introduces and analyzes the types of assets, examines the asset liquidation process of branches, and addresses related questions.

I. Overview of issues related to the asset liquidation process of branches 

When a corporate branch ceases operations or undergoes a structural transformation, asset liquidation becomes a mandatory step to ensure transparency and legal compliance. A proper understanding of such a process helps enterprises mitigate risks while safeguarding their legitimate rights and interests.

1. Definition of the asset liquidation process of a branch 

Pursuant to Clause 1, Article 44 of the Law on Enterprise 2020, a branch is a dependent unit of an enterprise, tasked with performing all or part of the enterprise’s functions, including authorized representation functions.

The liquidation of branch assets is understood as the process of handling, allocating, selling, or transferring the remaining assets of a branch upon termination of its operations. Such assets may include leased or purchased real estate, equipment, machinery, inventories, land use rights (if any), working tools, and other proprietary rights.

The purpose of liquidation is to fully settle financial obligations, repay debts to relevant parties, and determine the residual value to be transferred to the parent company or other entitled parties.

2. Example of the asset liquidation process of branches

Company A has a branch in Da Nang and decides to cease its operations. In such a case, the company will proceed as follows:

  • Conducting a comprehensive inventory of all remaining assets at the branch.
  • Establishing a liquidation committee or engaging an independent valuation entity.
  • Auction or transfer assets in accordance with applicable regulations.
  • Settling outstanding debts (premises rental, supplier payables, employee salaries, etc.).
  • After all obligations are settled, any remaining balance (if any) is transferred to the parent company.

Such a process ensures transparency and helps the company avoid disputes with partners, employees, or regulatory authorities.

3. Importance of the asset liquidation process of branches

The asset liquidation process carries not only financial significance but also profound legal implications:

  • Ensuring legal compliance: A branch may only officially terminate its operations after assets and related obligations have been duly resolved.
  • Minimizing disputes: A clear and well-structured process helps prevent conflicts among the parent company, the branch, and partners.
  • Maintaining corporate reputation: Transparent liquidation demonstrates professionalism and builds trust with customers and investors.
  • Facilitating restructuring: Upon completion of liquidation, enterprises can more easily redirect investments to other sectors or locations.

II. Types of branch assets

Pursuant to Article 2 of Circular No. 45/2013/TT-BTC, branch assets may be classified into tangible fixed assets and intangible fixed assets:

  • Tangible fixed assets: Primary means of production with physical form that satisfy the criteria for tangible fixed assets, participate in multiple business cycles while retaining their original physical form, such as buildings, structures, machinery, equipment, and vehicles.
  • Intangible fixed assets: Assets without physical form representing an invested value that satisfies the criteria for intangible fixed assets, participating in multiple business cycles, such as costs directly related to land use, issuance rights, inventions, patents, and copyrights.

III. Legal basis for the asset liquidation process of branches

Relevant regulations on asset liquidation include:

  • Law on Enterprise 2020, as amended in 2025: Article 44 on the legal status of branches; Article 213 on termination of branch operations.
  • Decree No. 168/2025/ND-CP on enterprise registration: Article 66 on registration of termination of branch operations.
  • Circular No. 200/2014/TT-BTC: Article 35 on tangible fixed assets, including asset liquidation.
  • Circular No. 45/2013/TT-BTC, as amended and supplemented by Circular No. 147/2016/TT-BTC, Circular No. 28/2017/TT-BTC, and Circular No. 30/2025/TT-BTC: Chapter II on fixed asset management.

IV. The asset liquidation process of branches

The procedures for liquidating assets upon dissolution generally include the following steps:

1. Issuance of a decision on termination of branch operations

The parent company issues a resolution or formal decision on termination of branch operations according to Clause 1, Article 213 of the Law on Enterprise 2020. It serves as the primary legal basis for subsequent procedures.

2. Establishment of an asset liquidation committee

The enterprise may establish an asset liquidation committee or engage professional valuation and auction service providers. The committee is responsible for inventorying, evaluating, and supervising the entire liquidation process.

3. Inventory and classification of assets

All branch assets are inventoried, including fixed assets, current assets, proprietary rights, and financial assets. Each category of assets is subject to different handling methods.

4. Determination of financial obligations and liabilities

The branch must consolidate all financial obligations, such as tax liabilities, employee wage arrears, supplier debts, and ongoing contracts. The order of settlement is determined in accordance with legal regulations.

5. Sale, transfer, or disposal of assets

  • High-value assets are typically sold through public auctions.
  • Low-value assets may be sold directly or liquidated internally.
  • Proprietary rights (such as lease contracts or software) may be terminated or transferred to another entity.

6. Settlement of debts and related obligations

Proceeds from asset liquidation are used to settle financial obligations in the order of priority prescribed by law: Taxes, employee wages, partner debts, and other obligations.

7. Report of results and records

The liquidation committee prepares a detailed report on the entire asset handling process and submits it to the parent company and competent authorities (if required). Records must be archived for inspection and audit purposes upon request.

8. Completion of procedures for termination of branch operations

Upon completion of liquidation and settlement of obligations, the parent company implements procedures to terminate branch operations with the business registration authority in accordance with Article 66 of Decree No. 168/2025/ND-CP. Within 10 days from the date of issuance of the decision on termination of branch operations, the enterprise submits the application dossier for termination to the provincial-level business registration authority where the branch is located. 

V. Questions regarding the branch asset liquidation process

1. How is the liquidation process suspended in cases of disputes?

When disputes arise concerning assets, rights, or obligations of the branch, liquidation may be partially or fully suspended pending a decision by a competent authority (Court or Arbitration). During such a period, enterprises are still required to conduct inventories and prepare reports to ensure transparency once the dispute is resolved.

2. What accounting and auditing regulations must be observed during the asset liquidation?

The asset liquidation process must be properly recorded and accounted for in accordance with accounting standards, specifically Accounting Standard No. 03 on tangible fixed assets and Accounting Standard No. 04 on intangible fixed assets issued together with Decision No. 149/2001/QD-BTC dated December 31, 2001.

3. How are outstanding debts handled in the asset liquidation process of branches? 

Pursuant to Article 213 of the Law on Enterprise 2020, an enterprise whose branch has terminated operations remains responsible for executing contracts and settling all outstanding debts, including tax liabilities of the branch, and for continuing to employ employees or fully settling lawful employee entitlements in accordance with law.

Accordingly, any unpaid debts of the branch must be settled by the parent company, including tax liabilities, and the parent company must continue to employ employees or fully resolve their lawful interests as prescribed by law.

4. Is it permissible to transfer assets while the branch asset liquidation process is ongoing?

Assets may be transferred during the branch asset liquidation process. However, such transfers must comply with legal regulations and be conducted under the supervision of the liquidation committee or valuation/auction service providers. Enterprises are prohibited from arbitrarily selling assets at undervalued prices that cause losses or adversely affect the rights of creditors and other stakeholders.

5. How is the liquidation process affected if the parent company is declared bankrupt?

If the parent company is declared bankrupt, the liquidation of branch assets will be incorporated into the parent company’s overall bankruptcy proceedings in accordance with the Law on Bankruptcy 2014. In such a case, branch assets are considered part of the parent company’s assets and are handled under procedures supervised by the Court and the appointed bankruptcy administrator.

VI. Do you need legal assistance with the branch asset liquidation process?

Although seemingly straightforward, the branch asset liquidation process involves numerous complex legal issues, including accounting, finance, labor, and disputes with partners. Improper handling may expose enterprises to disputes, administrative penalties, or even criminal liability.

If you are seeking a reputable law firm to support you in the branch asset liquidation process, please contact NPLAW for timely and comprehensive legal consultation.