SEPERATING COMPANY B.V
B.V. Company set up in Ho Chi Minh City, has a resort project in Nha Trang, the company wants to transfer this resort project to another company to implement (had H.A. Company asked to buy). Currently, Khanh Hoa People’s Committee does not accept transfer to other investors, if the transfer is forced to re-appraised the investor’s capacity from the beginning
S.N has come to ask Attorney to address the following issues:
– How to transfer without having to apply for project appraisal from scratch
– Transfer tax
Attorney studied the dossier and found that B.V. has many different projects and fast trades, the company has a thick history of operation for more than 30 years.
If the procedure for transferring all capital contributed to B.V company, the company shareholders do not agree but are not feasible because the company has not only resort projects in Nha Trang.
Attorney has also been in contact with Khanh Hoa Department and the state agency not to agree on the transfer of outstanding judgment to a new legal entity without competent assessment, as this project is the project of the city.
After contact with all parties, it is necessary to separate the B.V. project into a new company, so that it can be transferred to the buyer, H.A.
The provisions on separation of companies are expressed in Article 193 of the Law on Enterprises as follows:
Article 193. Business splitting
- Limited Liability Company, Joint Stock Company may separate by transferring part of the assets, rights and obligations of the existing company (hereinafter referred to as the separated company) to establish one or several limited liability companies or new joint-stock companies (hereinafter referred to as the separated company) without ceasing to exist at the company’s separation.
- Separation of the company can be done in one of the following methods:
a/ Part capital contribution, shares of members and shareholders together with assets corresponding to the value of contributed capital, shares transferred to new companies according to the proportion of ownership in the separated company and respectively the value of assets transferred to the new company;
b) All capital contributions, shares of one or several members and shareholders together with assets corresponding to the share value, their capital contribution shall be transferred to new companies;
c) Combine both cases specified at Point a and Point b of this Clause.
The separated company must register for changes in charter capital and the number of members corresponding to the capital contribution, shares and member numbers are reduced simultaneously with the enterprise registration of new companies.
3. The procedure for separating limited liability companies and joint stock companies is prescribed as follows:
a) The Board of Members, Company Owners or the General Meeting of Shareholders of the Company shall be separated by the resolution of the company separation in accordance with this Law and the Company Charter. The resolution of the separation of the company must contain the main contents of the name and address of the head office of the separated company; the name of the separated company to be established; the employer plan; the manner of separation of the company; the value of assets, rights and obligations transferred from the separated company to the separated company; the real term currently separate the company. The resolution of the separation of the company must be sent to all creditors and notified the employee within 15 days, from the date of adoption of the resolution;
b) Members, company owners or shareholders of the company shall be separated through the Charter, elect or appoint the Chairman of the Board of Members, the Chairman of the Company, the Board of Directors, the Director or the General Director and conduct enterprise registration in accordance with this Law. In this case, the enterprise registration dossier must be accompanied by the resolution of separation of companies specified in Point a of this Clause.
After the enterprise registration, the separated company and the separated company must be jointly responsible for outstanding debts, employment contracts and other property obligations of the separated company, except for cases where the company is separated, the newly established company, creditors, clients and employees of the company the company is separated with another agreement.
Accordingly, B.V was able to separate the project in Nha Trang to bar an independent enterprise with capital equivalent to the property value of the project.
Then the transfer of all this contributed capital to another investor is easily carried out.
B.V. Company owners pay a 20 percent transfer tax on the amount of the transfer value difference and the value of the company’s capital contribution has separated.