Legal regulations on registration of suspension of company operations

NPLaw analyzes the current legal regulations governing the registration of suspension of company operations, including applicable conditions, procedures, and important considerations to ensure that such suspension is implemented in compliance with the law and to minimize risks for enterprises.

NPLaw analyzes the current legal regulations governing the registration of suspension of company operations, including applicable conditions, procedures, and important considerations to ensure that such suspension is implemented in compliance with the law and to minimize risks for enterprises.

I. Demand for registration of suspension of company operations in the current context

With economic fluctuations, the demand for registering suspension of company operations has become increasingly common, particularly among small and medium-sized enterprises. Common reasons include:

Financial difficulties: Declining revenue, high operating costs, and unstable cash flow;
Restructuring or transformation of business types: Enterprises temporarily suspend operations to focus on restructuring personnel, products, or converting business models;
Temporary suspension to reduce costs: In seasonal industries, enterprises choose to suspend operations during off-peak periods to reduce tax, insurance, and administrative expenses;
External impacts: Changes in legal policies, market fluctuations, epidemics, or natural disasters;
Pending completion of other legal procedures: For example, suspension prior to dissolution or pending issuance or re-issuance of sub-licenses.

Registration of suspension not only helps enterprises reduce financial pressure but also ensures legal compliance, avoiding administrative sanctions for failure to timely notify business registration authorities and tax authorities.

II. Definition of registration of suspension of company operations

Registration of suspension of company operations refers to an administrative procedure whereby an enterprise notifies the business registration authority and the tax authority of its intention to temporarily suspend all or part of its business activities for a specified period in accordance with the law.

Such a procedure applies to various types of enterprises, including limited liability companies, joint-stock companies, partnerships, and private enterprises.
The duration of each suspension period must not exceed 12 months.
During the suspension period, the enterprise is required to fully pay any outstanding taxes, social insurance, health insurance, and unemployment insurance contributions; continue to settle debts; and fulfill obligations under contracts with customers and employees, unless otherwise agreed by the parties involved.

In essence, registration of suspension constitutes a lawful legal mechanism allowing enterprises to temporarily cease operations without being deemed in breach of the obligation to maintain continuous business activities.

III. Legal provisions governing registration of suspension of company operations

1. Relevant legal regulations

Main legal provisions governing registration of suspension of company operations include:

Law on Enterprise 2020, as amended in 2025: Article 206 on suspension of business operations:

Enterprises must provide written notice to the business registration authority at least three (03) working days prior to the intended suspension date or prior to continuing business operations before the notified schedule;
The business registration authority or competent state authority may require enterprises to suspend operations in the following cases:
+ Suspension or termination of conditional business lines or market access conditional sectors applicable to foreign investors where the enterprise fails to meet statutory conditions;
+ Suspension at the request of competent authorities under laws on tax administration, environmental protection, or other relevant legal regulations;
+ Suspension or termination of one or more business lines or sectors under a court decision;
During the period of business suspension, the enterprise must pay all outstanding taxes, social insurance, health insurance, and unemployment insurance contributions, as well as continue to pay debts and fulfill contracts signed with customers and employees, unless the enterprise, creditors, customers, and employees agree otherwise.

Decree No. 168/2025/ND-CP provides detailed guidance on procedures for suspension:

Article 60: Dossiers and procedures for suspension of business operations;
Article 61: Suspension at the request of competent state authorities.

2. Conditions for registration of suspension of company operations

Pursuant to Article 206 of the Law on Enterprise 2020, as amended in 2025, an enterprise must submit written notice to the business registration authority no later than three (03) working days prior to the intended suspension date.

Additionally, in certain circumstances, competent authorities may require the enterprise to suspend operations, including:

Failure to meet conditions applicable to conditional business lines or market access sectors for foreign investors;
Suspension requested by relevant authorities in accordance with laws on tax administration, environmental protection, or other applicable regulations;
Suspension or termination of certain business activities under a court decision.

3. Procedures for suspension of company operations

Pursuant to Article 60 of Decree No. 168/2025/ND-CP, the procedure for suspension is as follows:

In cases where an enterprise suspends its business operations, it must submit a notification dossier to the provincial-level business registration authority where its headquarter is located at least three (03) working days prior to the suspension date.

The notification dossier includes:

Notice of suspension of business operations;
A copy or original of the resolution or decision on suspension, issued by:
+ The owner (for single-member limited liability companies);
+ The Members’ Council (for multi-member limited liability companies and partnerships);
+ The Board of Directors (for joint-stock companies).

Upon receipt of the dossier, the business registration authority shall issue a receipt and schedule for result notification. Within one (01) working day from the date of receipt, the authority shall review the validity of the dossier and issue a confirmation of suspension. If the dossier is invalid, the authority shall notify the enterprise in writing of required amendments or supplements.

The business registration authority shall update the legal status of the enterprise and its affiliated units (branches, representative offices, business locations) from “Active” to “Suspended”.

IV. Questions on registration of suspension of company operations

1. What financial obligations must be fulfilled prior to registration?

Before registering suspension, the enterprise must complete all financial obligations to the State and relevant parties, including:

Taxes: Finalization of corporate income tax, value-added tax, personal income tax, etc.;
Social insurance: Finalization and full payment of social, health, and unemployment insurance for employees;
Debts: Settlement of liabilities to partners, suppliers, and credit institutions.

Failure to comply may result in rejection of the suspension application by the business registration authority or tax authority.

Additionally, during the suspension period, the enterprise must continue to fulfill outstanding obligations unless otherwise agreed.

2. Why is notification of suspension important for shareholders and employees?

Notification of suspension is crucial as it ensures transparency and protects the rights of stakeholders:

Shareholders: To be informed of the company’s status, protect their interests in capital and dividends, and participate in decisions regarding dissolution or restructuring;
Employees: To have sufficient time to prepare, seek alternative employment, and receive full entitlements such as salary, allowances, and insurance benefits.

Lack of transparency may lead to disputes or legal claims.

3. Can the suspension period be extended?

Pursuant to Clause 1, Article 60 of Decree No. 168/2025/ND-CP, if an enterprise wishes to continue suspension beyond the notified period, it must submit a new notification dossier at least three (03) working days prior to the expiration of the current suspension period. Each suspension period must not exceed 12 months.

4. How are disputes related to suspension resolved?

In the cases of disputes arising from suspension (among shareholders, between the company and partners, or with employees), the enterprise should:

Conduct internal negotiation and mediation;
Submit the dispute to commercial arbitration or a court for resolution if unresolved.

Thus, suspension procedures should only be finalized after disputes are resolved to avoid prolonged legal risks.

5. Are there sanctions for non-compliance with suspension procedures?

Failure to properly complete suspension procedures may result in administrative fines under Decree No. 122/2021/ND-CP:

Article 46: Fines ranging from 50,000,000 VND to 100,000,000 VND for continuing operations despite being required to suspend;
Article 48: Fines ranging from 15,000,000 VND to 20,000,000 VND for continuing conditional business activities after suspension has been mandated.

V. Why enterprises should seek legal counsel for suspension registration

Engaging legal counsel in relation to suspension registration provides the following benefits:

Ensuring legal compliance: Lawyers assist in preparing dossiers and avoiding errors that may result in rejection or delays;
Resolving disputes and outstanding obligations: Lawyers can represent enterprises in negotiation, mediation, or litigation where necessary;
Optimizing time and costs: Enterprises can focus on asset transfer or capital recovery instead of handling complex procedures;
Strategic advisory: Lawyers may recommend suspension or transfer of the company as an alternative to dissolution, thereby preserving interests.

Clients seeking advisory services on registration of suspension of company operations are encouraged to contact NPLaw for direct consultation and guidance.