Legal regulations on revoking the license for establishment

Revoking the License for establishment is an important legal process, ensuring that enterprises are subject to operate in a legal framework and comply with stated legal regulations. In modern development and strict competition of the business market, such a revocation is not only a final legal action for violating enterprises, but it is also useful and necessary measures to prevent and deter them for maintaining the market order. In fact, it is extremely concerning for enterprises to clearly understand and comply with Law on revoking the License for establishment, bringing significantly effective business operations for them as well as contributing into a workable and firm economic market.  

I/ Understanding about a revocation of the License for establishment

Management and adjustment of enterprises’ business activities are an indispensable part in the management system of the State. Accordingly, one of main measures is a revocation of the License for establishment, it is implemented for enterprises violating legal regulations too seriously to not continuously operate their business under registered name and information by the competent State authorities.

The revocation process is severely executed from verification stages of enterprise’s information and behaviors. The Business Registration Authority shall collaborate with the Police Security Authority to prove the accuracy of declared contents. When obtaining a final result, the Business Registration Certificate shall complete necessary procedures to revoke the License. 

Revoking the License for establishment both significantly affects enterprise’s business operation and reputation and legitimate rights of their employees, partners and clients (customers). Thus, it is required to cautiously implement and comply with legal regulations.

II/ Legal regulations on revoking the License for establishment

1. What is a revocation of the License for establishment?

A revocation of the License for establishment means the competent authority decides to revoke and rescind the value of the License issued for enterprises or organizations.

2. What cases revoke the License for establishment?

Pursuant to Clause 1, Article 212 of the Law on Enterprise 2020, enterprises are revoked their License for establishment in the following cases:

- Contents declared in the business registration dossier aren’t accuracy;

- Enterprises set up by entities prohibited under Clause 2, Article 17 of this Law;

- Enterprises pause their business activities in one (01) year without notifying the Business Registration Authority and the Tax Authority;

- Enterprises don’t send their reports as defined by Point c, Clause 1, Article 216 of this Law to the Business Registration Authority within six (06) months from the date of obtaining a written request or expiring to send;

- Other cases under Court’s decisions or requests of the competent authority according to the Law.

3. Which authorities are competent to execute the revocation of the License for establishment?

Pursuant to Article 75 of the Decree No. 01/2021/ND-CP, the Business Registration Office is a competent entity to revoke the License for establishment.

III/ Some questions on revoking the License for establishment

1. Can it apply for reissuing the License for establishment when it is revoked?

Pursuant to Clause 2, Article 27 of the Law on Enterprise 2020, if the License for establishment is lost, damaged or destroyed in any other form, enterprises are entities to be reissued the License by the competent authority and pay the fee according to the Law.

Thus, cases of being revoked the License for establishment aren’t subject to apply for reissuance.

2. Can the License for establishment be revoked when the enterprise doesn’t register its tax code?

Pursuant to Clause 1, Article 212 of the Law on Enterprise 2020, enterprises shall be revoked their License for establishment in the following cases:

- Contents declared in the business registration dossier aren’t accuracy;

- Enterprises set up by entities prohibited under Clause 2, Article 17 of this Law;

- Enterprises pause their business activities in one (01) year without notifying the Business Registration Authority and the Tax Authority;

- Enterprises don’t send their reports as defined by Point c, Clause 1, Article 216 of this Law to the Business Registration Authority within six (06) months from the date of obtaining a written request or expiring to send;

- Other cases under Court’s decisions or requests of the competent authority according to the Law.

Thus, when enterprises don’t implement the tax registration, they will not be revoked the License.

3. How can enterprises be handled when they still conduct their business operations despite having revoked the License for establishment?

Based on Point b, Clause 4, Article 46 of the Decree No. 122/ 2021/ ND-CP, a fine from 50.000.000 VND to 100.000.000 VND shall be applied for a case continuously conducting business operations when being revoked the License for establishment or receiving the competent State authority’s request for pausing, suspending or terminating business activities.

Thus, enterprises shall be fined from 50.000.000 VND to 100.000.000 VND if they still operate despite the License being revoked. 

IV/ Legal advice services for the revocation of the License of establishment

The above information on revoking the License for establishment is necessary and concerned contents that NPLaw desires to provide to the Clients, helping them know relevant legal regulations to avoid worthless mistakes. After referring to this article, if Clients have any further questions or need to resolve other legal issues, please do not hesitate to contact NPLaw to obtain direct and prompt support from our team.