Regulations on resolutions for termination of branch operations

To ensure compliance with applicable regulations, a resolution on termination of branch operations is an important legal document serving as the basis for related administrative procedures. Such a resolution must ensure legality, transparency, and adherence to statutory procedures.

I. Current practice regarding resolutions on termination of branch operations

At present, the issuance of resolutions on termination of branch operations in Vietnam has become relatively common, particularly in the context of corporate restructuring or downsizing. However, the implementation of such resolutions still reveals several shortcomings. Many enterprises have not fully complied with legal procedural requirements, such as timely notification to business registration authorities, fulfillment of tax obligations, and settlement of employees’ rights at the branch level. In certain cases, there is a lack of transparency in internal information disclosure, causing difficulties for shareholders and other stakeholders. 

Additionally, implementation is often delayed due to insufficient coordination among internal departments. Such situations indicate the need for stricter supervision by competent authorities and improved legal awareness among enterprises to ensure legality and efficiency in the process of terminating branch operations.

II. What is a resolution on termination of branch operations?

1. Importance of the resolution

The resolution on termination of branch operations plays a main role in ensuring the legality, transparency, and effectiveness of the process of ceasing the operation of a dependent unit within an enterprise. It serves as the primary legal basis for implementing related administrative procedures, including asset liquidation, finalization of tax obligations, settlement of employees’ rights, and notification to the business registration authority. In the absence of a clear resolution, enterprises may face legal risks, administrative sanctions, or disputes with relevant parties.

Moreover, such a resolution reflects internal consensus within the enterprise and embodies strategic decisions of the owner or governing body regarding restructuring, downsizing, or business reorientation. Proper issuance of the resolution not only ensures legal compliance but also enhances corporate governance credibility and accountability.

2. Main considerations when issuing the resolution

The following are important considerations when issuing a resolution on termination of branch operations in Vietnam:

• Authority to issue the resolution: The resolution must be adopted by a competent body within the enterprise, such as the Members’ Council, the Board of Directors, or the owner, depending on the enterprise type.
• Clear grounds for termination: The resolution should clearly state the reasons for termination, such as ineffective operations, strategic changes, force majeure, or other objective factors.
• Completion of tax obligations: Prior to submitting a notice of termination, the branch must fulfill all tax obligations with the local tax authority.
• Settlement of employees’ rights: The enterprise must ensure full payment of salaries, allowances, and other benefits to employees at the branch.
• Asset liquidation and contract settlement: A plan must be established for handling assets, ongoing contracts, and liabilities related to the branch.
• Timely notification: Within 10 days from the date of issuance, the enterprise must notify the Business Registration Authority where the branch is located.
• Legal responsibility: The legal representative and the head of the branch are responsible for the accuracy and truthfulness of the termination dossier.

III. Legal provisions governing resolutions on termination of branch operations

1. Main legal provisions to note

Pursuant to Clauses 1 and 2, Article 213 of the Law on Enterprise 2020 (as amended by Clause 24, Article 1 of the amended Law on Enterprise 2025):

• Branches, representative offices, and business locations of an enterprise may terminate their operations upon the decision of the enterprise or upon revocation decisions issued by competent state authorities.
• The legal representative of the enterprise and the heads of branches or representative offices subject to termination shall take joint responsibility for the truthfulness and accuracy of the termination dossier.

In addition, Clause 2, Article 66 of Decree No. 168/2025/ND-CP provides: 

• Within 10 days from the date of the decision on termination of operations of a branch, representative office, or business location, the enterprise must submit a dossier for registration of termination to the provincial-level Business Registration Authority where such branch, representative office, or business location is located.
• The dossier shall include: A copy or the original of the resolution or decision on termination of operations issued by the owner (for single-member limited liability companies), the Members’ Council (for multi-member limited liability companies and partnerships), or the Board of Directors (for joint stock companies).

Accordingly, enterprises should note:

• Authority to issue the resolution: It must be adopted by the competent body (owner, Members’ Council, or Board of Directors).
• Notification timeline: Notification must be submitted within 10 days from the date of the decision.
• Legal responsibility: The legal representative and the head of the branch are responsible for the dossier’s accuracy and truthfulness.

2. Common violations related to the resolution

Enterprises should pay particular attention to the following common violations:

• Failure to notify the Business Registration Authority: Late or omitted notification may result in administrative fines ranging from 20,000,000 VND to 30,000,000 VND under Point b, Clause 1, Article 54 of Decree No. 122/2021/ND-CP.
• Incomplete legal documents: Absence of meeting minutes, competent authority decisions, or valid authorizations may result in rejection or delays.
• Failure to fulfill tax obligations: Outstanding tax liabilities may prevent closure of the tax code and delay or invalidate the dossier.
• Failure to settle employees’ rights: Non-payment of salaries or benefits, or failure to notify employees, may lead to labor disputes.

IV. Questions on resolutions on termination of branch operations

1. If a branch has foreign investment capital, are additional procedures required for the resolution on termination of branch operations?

Pursuant to Clauses 1 and 2, Article 213 of the Law on Enterprise 2020 (as amended by Clause 24, Article 1 of the amended Law on Enterprise 2025), and Point b, Clause 2, Article 66 of Decree No. 168/2025/ND-CP, the resolution on termination of a foreign-invested branch is subject to the same procedures as those applicable to domestic branches. Accordingly, no additional procedures are required for resolutions on termination of operations of foreign-invested branches.

2. Must the resolution on termination of branch operations clearly specify responsibilities for debt settlement?

Current legislation does not provide specific requirements regarding the content of a resolution on termination of branch operations. However, it is advisable that such resolution clearly sets out responsibilities for debt settlement. It is not only an important element to ensure internal transparency but also a practical requirement to mitigate potential legal and financial risks after the branch ceases operations.

3. What is the process for drafting and adopting a resolution on termination of branch operations?

The drafting and adoption of a resolution on termination of branch operations is not merely an internal procedure but also the initial step in the overall legal process for closing a branch. The process is generally implemented as follows:

Determination of grounds for termination:

• The reasons may include ineffective operations, changes in business strategy, or revocation of the branch’s license.
• Such reasons must be clearly stated in the resolution to serve as a legal basis.

Preparation of the resolution: The resolution typically includes:

• Information of the branch (name, address, tax code);
• Reasons for termination;
• Effective date of termination;
• Designation of a representative responsible for implementing legal procedures;
• Plans for handling debts, assets, contracts, and employees’ rights.

A meeting to adopt the resolution:

• For limited liability companies, the resolution is adopted by the Members’ Council.
• For joint stock companies, the resolution is adopted by the Board of Directors or the General Meeting of Shareholders (depending on the company charter).
• The meeting minutes and the resolution must be duly signed by competent persons.

Retention and use of the resolution:

• The resolution forms part of the dossier submitted to the Business Registration Authority to implement procedures for termination of branch operations.
• Additionally, it may be required by tax authorities during the finalization of financial obligations.

4. In the cases of internal disputes, will the resolution on termination of branch operations be suspended?

Pursuant to Clause 7, Article 66 of Decree No. 168/2025/ND-CP: In cases where a branch, representative office, or business location has been notified by the provincial-level Business Registration Authority as being in the process of termination in accordance with this Decree, upon the expiry of 180 days from the date of such notification published on the National Business Registration Portal, if no dossier for registration of termination is received and no written objections are submitted by tax authorities or other relevant organizations, individuals, or stakeholders, the Business Registration Authority shall proceed to terminate the operation of the branch, representative office, or business location in the National Business Registration Database and issue a notice of such termination.

Accordingly, in the cases of internal disputes, relevant parties may submit written objections to the provincial-level Business Registration Authority. It may result in the suspension of legal procedures relating to the termination of branch operations, thereby effectively suspending the implementation of the resolution.

5. Are there cases where the Business Registration Authority may reject the dossier if the resolution is invalid?

The Business Registration Authority is entitled to reject the dossier if the resolution on termination of branch operations is invalid or incomplete in accordance with legal requirements. Common cases include:

Improper authority or procedures:

• For example, the resolution is not adopted by the Members’ Council or the General Meeting of Shareholders in accordance with the Law on Enterprise.
• Absence of meeting minutes or signatures of competent persons.

Failure to fulfill tax obligations: The tax authority may confirm that the branch has not completed its financial obligations, resulting in suspension of dossier processing by the Business Registration Authority.

Incomplete or improperly formatted dossier:

• Missing required documents such as copies or originals of the resolution or the notice of termination.
• Failure to use the prescribed forms for notification of termination

V. Do you need legal assistance for a resolution on termination of branch operations?

Let us support you. With a team of experienced lawyers and in-depth expertise in enterprise law, we provide comprehensive solutions from drafting compliant resolutions, handling debts, to completing procedures with the Business Registration Authority. Avoid legal complications that may disrupt your plans. Contact NPLaw for prompt, accurate, and confidential legal advice.