Legal advisory on asset transfer during dissolution

The following article provides in-depth legal advisory on procedures, principles, and main considerations in conducting asset transfers during the dissolution of enterprises, enabling organizations and individuals to ensure compliance with the law and minimize risks.

The following article provides in-depth legal advisory on procedures, principles, and main considerations in conducting asset transfers during the dissolution of enterprises, enabling organizations and individuals to ensure compliance with the law and minimize risks.

I. Introduction to asset transfer during dissolution in the current context

In the fluctuating market economy, dissolution of enterprises has become relatively common when business operations are no longer effective or fail to meet legal requirements. One of the critical issues in such a process is asset transfer, which may include handling factories, machinery, inventories, land use rights, intellectual property rights, or receivables. This is a matter prone to disputes if enterprises fail to comply with statutory procedures and safeguard the rights of creditors, shareholders, or other stakeholders.

Example: In 2023, a garment company in Ho Chi Minh City, upon dissolution, transferred its entire factory to another enterprise without having fulfilled its tax and social insurance liabilities. The transfer was declared invalid by the competent authority, resulting in legal risks for both the transferee and the creditors.

II. What is asset transfer during dissolution?

In dissolution, asset disposal is central, as it determines the enterprise’s ability to repay debts, protect the rights of stakeholders, and legally terminate its operations. To better understand, it is necessary to clarify the concept and timing of asset transfer.

1. Definition of asset transfer during dissolution

Asset transfer during dissolution refers to the allocation, liquidation, or assignment of assets owned by the enterprise to relevant parties, in accordance with law. The purpose of such an activity is to settle financial obligations, protect the lawful rights of creditors, employees, and shareholders, and resolve property relations before the enterprise ceases to exist.

2. When must asset transfer be conducted in dissolution?

Asset transfer is executed after the enterprise has issued a lawful decision on dissolution and commenced related legal procedures. Specifically, it is required in the following cases:

To settle tax debts, salaries, social insurance contributions, and other financial obligations.
To repay outstanding debts owed to creditors or business partners.
After full settlement, any remaining assets are transferred for distribution among shareholders or capital-contributing members in proportion to their ownership.

III. Legal provisions governing asset transfer in dissolution

Asset transfer during dissolution is not only an economic matter but is strictly regulated by law. Compliance ensures minimized dispute risks and protects the lawful interests of all stakeholders. Main provisions include:

1. Relevant legal regulations on asset transfer in dissolution

Law on Enterprises 2020, amended in 2025: It governs conditions for dissolution (Article 207) and procedures for dissolution (Article 208). The private enterprise owner, Members’ Council, company owner, or Board of Directors directly organizes asset liquidation unless the Charter provides for a separate liquidation committee.
Debt settlement must follow statutory priority:
+ Wage debts, severance allowances, social insurance, health insurance, unemployment insurance, and other employee benefits under collective agreements and labor contracts.
+ Tax debts.
+ Other debts.
After completing dissolution expenses and settling debts, the remainder is distributed to the private enterprise owner, members, shareholders, or company owner in proportion to their equity ownership.
Additionally, Article 64 of Decree No. 168/2025/ND-CP provides detailed guidance on dissolution procedures.

2. Conditions for asset transfer during dissolution

Under Article 208 of the Law on Enterprises 2020, asset transfers are permitted only when:

A lawful dissolution resolution or decision has been adopted, specifying essential details such as the enterprise’s name and address, reasons for dissolution, duration and procedures for liquidation and debt settlement, labor contract settlement plan, and signatures of the legal representatives.
Notification requirements have been met: Within 07 working days, the resolution or decision and meeting minutes must be sent to the Business Registration Authority, tax authority, and employees, while also published on the National Business Registration Portal and publicly posted at the enterprise’s head office and branches.
Assets are liquidated directly by the private enterprise owner, Members’ Council, company owner, or Board of Directors, unless otherwise provided in the Charter.
Debt repayment follows statutory priority without infringing upon the rights of creditors or employees.

3. Sanctions for unlawful asset transfer during dissolution

Pursuant to Article 58 of Decree No. 122/2021/ND-CP, fines from 20,000,000 VND to 30,000,000 VND are imposed for violations such as:

Failure to conduct dissolution procedures when the company’s term expires without extension.
Failure to dissolve when membership falls below the statutory minimum for six consecutive months without converting the company type.
Failure to terminate operations of branches, representative offices, or business locations before filing for dissolution.

IV. Questions on asset transfer in dissolution

1. Is an audit required before asset transfer during dissolution?

An audit is not legally mandatory in all cases. However, it is advisable to ensure transparency, determine accurate asset values, prevent disputes, and facilitate supervisory oversight during liquidation.

2. Can assets be transferred to shareholders during dissolution, and how?

Under Clause 6, Article 208 of the Law on Enterprise 2020, after completing dissolution expenses and debts, the remaining assets may be distributed to shareholders or members in proportion to their capital contribution or shareholding.

However, it is only permissible after all financial obligations (taxes, wages, insurance, debts) are fully settled.

3. What legal risks are associated with asset transfer during dissolution?

Risks include unlawful transfers or asset dissipation to evade debts, resulting in invalidation of transactions, legal liability for managers, and infringement of creditors, employees, and shareholders’ rights.

4. Can transferred assets be subject to liability in disputes?

If asset transfers are unlawful, competent authorities may revoke or annul the transactions. Transferees may be required to return assets and compensate damages.

5. Can intangible assets, such as intellectual property rights, be transferred during dissolution?

Intellectual property rights (trademarks, copyrights, patents, etc.) are intangible assets and may be transferred in compliance with the law. According to Article 148 of the Intellectual Property Law 2005, as amended in 2009, 2019, and 2022, transfers of industrial property rights established through registration are effective only upon registration with the State management authority for industrial property.

V. Should enterprises seek legal counsel on asset transfer during dissolution?

Legal consultation is essential to ensure compliance, design transparent asset disposal plans, minimize disputes, and safeguard lawful interests. Lawyers can provide tailored solutions, assist with negotiations, and represent clients in disputes where necessary.

Clients seeking advisory on asset transfer during dissolution are invited to contact NPLaw for direct consultation and guidance.