The division and separation of enterprise assets may arise from restructuring needs, dissolution, enterprise division or separation, settlement of internal disputes, or requirements imposed by competent State authorities. In the following article, NPLaw analyzes the current legal regulations governing the division and separation of enterprise assets, as well as key legal issues to be noted in practical application.
I. Current situation regarding the division and separation of enterprise assets
The division and separation of enterprise assets has become increasingly common in the context where Vietnamese enterprises are actively restructuring to adapt to the market, resolve internal disputes, or prepare for investment, merger, or dissolution activities.
However, practical implementation shows that such an activity still involves many shortcomings and leads to numerous legal consequences, affecting both enterprises and related parties.
1. Increasing demand for asset division and separation
In an intensely competitive market environment, many enterprises choose asset division and separation as a solution to:
- Restructure their organizational structure and establish independent units to improve governance efficiency;
- Divide assets upon dissolution, bankruptcy, or in the process of enterprise division or separation;
- Resolve disputes among shareholders or capital-contributing members;
- Serve investment activities, transfer, divestment, or equitization.
2. Lack of legal awareness and transparency in asset division and separation
In practice, many enterprises do not clearly distinguish between enterprise assets and the assets of individuals or contributing organizations, resulting in non-transparent use of common assets or asset division not in compliance with legal procedures. Common situations include:
- Transfer or division of assets that are not registered under the enterprise’s name (e.g. land use rights or factories registered under individuals’ names);
- Failure to comply with valuation principles and regulations on division of common assets, leading to prolonged complaints and disputes;
- Failure to fully execute financial and tax obligations when transferring assets between legal entities or shareholders.
3. Lack of unified legal guidance and mechanisms
Currently, legal provisions relating to the division and separation of enterprise assets are scattered across various legal instruments such as the Law on Enterprise, the Civil Code, the Law on Land, tax laws, and the Law on Bankruptcy, without a unified and specific legal framework. It causes difficulties for enterprises, regulatory authorities, and even courts in practical application.
For example, when dividing or separating enterprises under the Law on Enterprise, the division of assets, debts, and tax obligations is not specifically guided, leading to significant legal risks after division or separation, especially regarding outstanding financial obligations or employees’ rights.
4. Increase in disputes related to asset division and separation
Practical adjudication statistics show a growing number of disputes related to the division and separation of enterprise assets, particularly in the following cases:
- Shareholders requesting capital withdrawal and demanding asset division inconsistent with enterprise law;
- Asset division and separation implemented without the consent of all members or shareholders;
- Failure to properly disclose or register legal information, resulting in related civil transactions being declared invalid.
II. Legal regulations on the division and separation of enterprise assets
1. What is the division and separation of enterprise assets?
The division and separation of enterprise assets refers to the allocation of all or part of assets under the ownership or lawful use rights of an enterprise to one or more other subjects (individuals, organizations, or newly established legal entities) in accordance with law. Asset division and separation may occur in situations such as enterprise division or separation, dissolution, bankruptcy, divestment, or pursuant to requirements of state authorities or court judgments.
Current law does not directly define “division and separation of enterprise assets” as an independent legal concept. However, through provisions of the Law on Enterprise 2020, the Civil Code 2015, the Law on Bankruptcy 2014, and other specialized regulations, it can be understood as a form of lawful transfer and allocation of enterprise assets associated with specific legal cases.
2. In which cases is the division and separation of enterprise assets regulated by law?
The law provides for the division and separation of enterprise assets in several specific contexts, including:
a. Division or separation of enterprises
Legal basis: Articles 198 and 199 of the Law on Enterprise 2020.
Accordingly, an enterprise may implement division or separation to form one or more new legal entities. In such a process, all assets, rights, and obligations of the original enterprise shall be allocated in accordance with resolutions of the owner, the General Meeting of Shareholders, or the Members’ Council.
b. Division of assets upon enterprise dissolution or bankruptcy
Legal basis: Articles 208 and 209 of the Law on Enterprise 2020; the Law on Bankruptcy 2014, especially Articles 53 and 54 on the distribution of bankruptcy assets.
Upon dissolution or a declaration of bankruptcy, enterprise assets shall be valued and disposed of to satisfy financial obligations in the statutory order of priority.
c. Division and separation of assets among members or shareholders
In limited liability companies or joint-stock companies, the division of assets among members upon capital withdrawal, transfer of capital contributions, or internal disputes must comply with:
- Articles 52 and 53 of the Law on Enterprise 2020 (two-member or more limited liability companies);
- Articles 120 and 127 of the Law on Enterprise 2020 (transfer of shares in joint-stock companies).
d. Division of assets under court judgments or decisions
For example, division of common assets in divorce cases involving ownership of company shares, or division of enterprise assets under court decisions in dispute settlement.
3. What are the procedures for the division and separation of enterprise assets?
Depending on the case, procedures may vary. Below are common procedures in several main situations:
a. Division or separation of enterprises under the Law on Enterprise 2020
Pursuant to Clause 2 Article 198 of the Law on Enterprise 2020, procedures for division of limited liability companies and joint-stock companies include:
- The Members’ Council, company owner, or General Meeting of Shareholders of the divided company adopts a resolution or decision on company division in accordance with the Law and the company charter. Such resolution or decision must be sent to all creditors and notified to employees within 15 days from the date of adoption;
- Members, owners, or shareholders of newly established companies adopt the charter, elect or appoint the Chairman of the Members’ Council, the Chairman of the company, the Board of Directors, the Director or General Director, and implement enterprise registration procedures. The enterprise registration dossier of the new company must include the resolution or decision on company division.
Pursuant to Clause 3 Article 199 of the Law on Enterprise 2020, procedures for company separation include:
- The Members’ Council, company owner, or General Meeting of Shareholders of the separated company adopts a resolution or decision on company separation in accordance with the Law and the company charter. Such resolution or decision must be sent to all creditors and notified to employees within 15 days from the date of adoption;
- Members, owners, or shareholders of the separated company adopt the charter, elect or appoint management positions, and implement enterprise registration procedures in accordance with law.
b. Division of assets upon dissolution
- Issuance of a dissolution decision;
- Establishment of an asset liquidation organization;
- Valuation and liquidation of assets to pay debts (taxes, social insurance, employees’ entitlements, etc.);
- Distribution of remaining assets to owners or shareholders (if any).
c. Division of assets in disputes or under court judgments
- A party initiates a lawsuit requesting division of common assets or determination of ownership portions;
- The court accepts and adjudicates the case;
- Upon an effective judgment or decision, the parties implement asset division in accordance with the ruling;
- Registration of changes in asset ownership (if required) with competent authorities (Department of Finance, Land Registration Office, etc.).
III. Questions on the division and separation of enterprise assets
1. Is it permissible to divide or separate enterprise assets that are under mortgage?
An enterprise is not permitted to unilaterally divide or separate mortgaged assets without the written consent of the mortgagee.
Pursuant to Article 320 of the Civil Code 2015, the mortgagor may not sell, replace, exchange, or donate mortgaged assets, and may only transfer, donate, or change the status of mortgaged assets in the following cases: The assets are circulating goods in the course of production or business; or non-circulating assets if consent is obtained from the mortgagee or as otherwise provided by law.
In cases involving division of mortgaged assets, the enterprise must:
- Notify the mortgagee (banks, credit institutions, etc.);
- Implement procedures to amend the security agreement, if necessary.
2. Must asset division and separation be approved by the Members’ Council or the General Meeting of Shareholders?
Asset division and separation must be approved by the highest decision-making body of the enterprise through a lawful resolution or decision, specifically:
- Limited liability companies: Decided by the Members’ Council (Article 59 of the Law on Enterprise 2020);
- Joint-stock companies: Decided by the General Meeting of Shareholders (Articles 138 and 139 of the Law on Enterprise 2020);
- State-owned enterprises: Decided by the owner or the owner’s representative in accordance with specialized laws.
Failure to obtain proper internal approvals may lead to disputes or invalid transactions.
3. Does asset division and separation affect the enterprise code and tax code?
Depending on the case:
- If a new enterprise is established through division or separation, the new enterprise will be granted a separate enterprise code and tax code;
- The original enterprise retains its enterprise code unless it is dissolved after division or separation.
4. Which authority has jurisdiction over disputes arising from asset division and separation?
Disputes arising from asset division and separation fall under the jurisdiction of:
- Competent People’s Courts in accordance with the Civil Procedure Code 2015;
- If there is an arbitration agreement, parties may refer the dispute to commercial arbitration under the Law on Commercial Arbitration 2010.
In addition, disputes involving public assets or state-owned enterprises may involve state inspection authorities, the State Audit, or specialized regulatory agencies.
5. Is re-registration with the business registration authority required after asset division and separation?
If the enterprise changes information such as charter capital, capital contribution ratios, or the list of members or shareholders, it must register such changes with the Business Registration Authority in accordance with Article 30 of the Law on Enterprise 2020 and Decree No. 168/2025/ND-CP.
IV. Legal consulting services on the division and separation of enterprise assets
The above information is provided by NPLaw to support clients in matters related to the division and separation of enterprise assets. Should you have any questions regarding the above issues or other legal matters, please contact NPLaw for direct consultation and guidance.
