New rules to mend bankruptcy loopholes

Tu Hoang

They have suggested adjustments to Article 13 on rights to establish, contribute capital, purchase shares and manage enterprises.

Under the proposed amendments to this article, the failure to perform bankruptcy and dissolution procedures for a defunct enterprise will strip key executives of the right to establish and manage enterprises in Vietnam. Affected people will include legal representatives of enterprises, chairpersons of joint stock companies, chairpersons of membership councils, and chairpersons of limited liability companies.

For Article 165 on dealing with breaches, enterprises whose registration licenses have been withdrawn as requested by tax agencies, business registration agencies and courts and fail to report their business activities in a year shall be subject to disciplinary action in accordance with the law.

The draft also includes new regulations on the national business registration portal that will publicize situation and infringements (if any) of enterprises.

Do Tien Thinh from the Business Registration Division under the Ministry of Planning and Investment said that the proposals aim to fix shortcomings of the 2005 Law on Enterprises.

According to the agency, up to 258,000 enterprises in the country had stopped operations and dissolved as of August. Of which, 94,500 enterprises had dissolved, 22,500 firms had halted operation and 141,000 others had stopped operations without making prompt announcements.

Besides, there have been 518 foreign direct investment (FDI) firms whose business leaders have taken flight.

Thinh said the 141,000 enterprises mentioned above have not paid taxes or business leaders have disappeared. They have to carry our bankruptcy and dissolution procedures. However, as the formalities are still complicated, only 100 enterprises register for bankruptcy status every year, Thinh said.

The problems may hurt benefits of business partners, lenders and employees while the State cannot recover tax debts.