Legal procedures for dividing, separating, consolidating, or merging a company in Vietnam might look like an internal matter between members and shareholders, but a single misstep can leave billions of dong in debt stranded between two legal entities, or stall a merger the day before signing because a required competition filing was missed. For companies without an in-house legal team, choosing the wrong form of reorganization or missing a mandatory deadline can add months to the restructuring process.
Is your company weighing whether to split off a business line into its own entity to raise capital more easily, or merge with a partner to scale up faster? Do you know how separating a company actually differs from dividing one, and why choosing the wrong form can get your filing rejected the moment it is submitted? If your company has foreign investment, are you aware that updating the enterprise registration certificate alone is not enough? Many SMEs and foreign-invested enterprises in Vietnam handle these reorganizations based on word of mouth or templates found online, only to discover the gaps once a filing is in or once employees and creditors raise a complaint. The analysis below covers the current rules, the steps involved, and the mistakes that come up most often in practice.
Division, separation, consolidation, and merger under the Law on Enterprises
All four forms fall under "corporate reorganization" as defined in the 2020 Law on Enterprises, and apply to limited liability companies and joint stock companies (private enterprises are not reorganized under these forms). The 2025 law amending the Law on Enterprises, in effect since 1 July 2025, left the original rules on division, separation, consolidation, and merger unchanged, so the analysis below remains the current basis for 2026.
Division means a company splits its assets, rights, obligations, members, and shareholders to establish two or more new companies. The divided company ceases to exist as soon as the new companies are issued their enterprise registration certificates. This is the point most often confused with separation, even though the two forms are legally very different.
In other words, separation only transfers part of the assets and obligations to set up a new company, while the original company continues operating at a smaller scale. Consolidation and merger are two different stories again: consolidation is when two or more companies combine to form an entirely new company, while a merger is when one or more companies transfer all their assets, rights, and obligations into an existing company, without creating a new legal entity. Both consolidation and merger terminate the existence of the companies being consolidated or absorbed, and the Law on Enterprises adds a condition that division and separation do not carry: the companies involved must comply with the Competition Law's rules on consolidation and merger, discussed further in the risk section below.
| Criterion | Division | Separation | Consolidation | Merger |
|---|---|---|---|---|
| Companies involved | 1 company divided into 2 or more | 1 company, split into 1 or more new companies | 2 or more companies combined | 1 or more companies merged into 1 existing company |
| New legal entity created | Yes, the new companies | Yes, the split-off company | Yes, the consolidated company | No, absorbed into an existing company |
| Original company survives | No, ceases to exist | Yes, at a reduced scale | No, the consolidating companies cease to exist | No (the absorbed company) |
| Liability for prior debts and labor contracts | The new companies are jointly liable | Both companies are jointly liable | The consolidated company assumes all liabilities | The surviving company assumes all liabilities |
Step-by-step legal procedure for division, separation, consolidation, and merger
Although the four forms carry different names and legal consequences, the implementation process follows a common framework under the 2020 Law on Enterprises and Decree 168/2025/ND-CP on enterprise registration, effective since 1 July 2025 and replacing Decree 01/2021/ND-CP.
- Pass an internal resolution. The Members' Council, company owner, or General Meeting of Shareholders adopts a resolution or decision for division and separation, or the companies involved prepare an agreement together with a draft charter for consolidation and merger. The required content includes the name and address of each company involved, the labor use plan, the method for dividing or converting capital contributions or shares, the principles for settling obligations, and the implementation timeline.
- Notify creditors and employees within 15 days. From the date the decision is issued or the agreement adopted, the company must send notice to all creditors and inform its employees. If the reorganization affects the jobs of a large number of employees, the company must also prepare a labor use plan under the Labor Code.
- File for enterprise registration. The dossier differs by form: division and consolidation file a registration dossier for the new company together with the relevant resolution or agreement; separation and merger file a dossier to register changes at the separating company or the surviving company itself. The provincial business registration authority reviews and issues the certificate within 3 working days of receiving a valid dossier.
- Complete tax obligations before the company ceases to exist. For division, consolidation, and merger, the divided, consolidated, or absorbed company only officially ceases to exist in the National Business Registration Database once the tax authority confirms that tax finalization and the transfer of tax obligations are complete; all of that company's branches, representative offices, and business locations must also cease operating before the company is finally terminated.
- Adjust the Investment Registration Certificate if the company has an investment project. A foreign-invested enterprise implementing an investment project must also adjust its Investment Registration Certificate if the reorganization changes the project's core content as stated on the certificate.
In other words, the new company receiving its enterprise registration certificate does not mean the old company is "done." On the national registration system, the divided, consolidated, or absorbed company remains in a pending status until the tax authority confirms finalization is complete, something many companies fail to account for when planning the timeline of a transaction.
Legal risks and common mistakes in practice
Most of the trouble that comes up is not because a company deliberately ignores the rules, but because these four forms of reorganization are easy to confuse or carry obligations that reach into other areas of law.
The most common mistake is using the wrong term when drafting the resolution, for example labeling a transaction "separation" when it is actually a "division," or the reverse. Because the registration dossier required for each form is different, a resolution with the wrong form named from the outset usually gets sent back by the business registration authority for correction, extending the timeline well beyond what was planned.
On the labor side, many companies assume the old company's obligations to its employees end along with that company, particularly in a merger. In practice, labor law binds both sides.
This means the surviving or consolidated company cannot claim that a matter belongs to the old company in order to avoid implementing a labor use plan that was already approved; employees terminated as a result of the reorganization are still entitled to a job-loss allowance under the regulations.
For consolidation and merger, there is a separate obligation that division and separation do not carry: checking the economic concentration notification threshold under the Competition Law. Under current regulations, a company must notify the National Competition Commission before proceeding if any of the following applies: the total assets or total revenue of the relevant companies in the Vietnamese market reach VND 3,000 billion or more in the preceding fiscal year, the transaction value reaches VND 1,000 billion or more, or the combined market share in the relevant market reaches 20% or more (Article 13, Decree 35/2020/ND-CP). For medium-to-large consolidations or mergers, particularly between companies in the same industry, skipping this step before signing can result in the transaction being treated as a violation of the economic concentration rules.
DEDICA's role in your company's reorganization
As part of its ongoing legal advisory package, DEDICA works alongside your company from the outset: helping identify the right form of reorganization for your business goals, drafting resolutions or agreements that meet the legal requirements, calculating the correct deadlines for notifying creditors and employees, and preparing the enterprise registration dossier. For foreign-invested enterprises, DEDICA reviews the Investment Registration Certificate adjustment in parallel, so the two certificates stay consistent and do not create complications later on. Every plan and dossier is checked by DEDICA's experienced lawyers before it reaches you.
Conclusion
The general procedure for dividing, separating, consolidating, or merging a company in Vietnam follows four steps: (1) pass an internal resolution or agreement that matches the form you have chosen; (2) notify all creditors and employees within 15 days, together with a labor use plan if a large number of staff are affected; (3) file the enterprise registration dossier with the provincial business registration authority; (4) complete tax finalization before the divided, consolidated, or absorbed company officially ceases to exist, and adjust the Investment Registration Certificate if the company has foreign investment. The three points most often missed are confusing the four concepts, which leads to a dossier drafted incorrectly from the start; assuming labor obligations automatically end with the old company; and for larger consolidations or mergers, overlooking the economic concentration notification requirement. Before adopting any reorganization resolution, review all four dimensions together, corporate, labor, tax, and investment, rather than handling each one separately and discovering the gaps later.
If your company is considering a division, separation, consolidation, or merger, DEDICA's ongoing legal advisory package can review your specific plan before you adopt the resolution, helping you avoid having to redo the dossier or deal with disputes that surface later. Contact DEDICA to have a lawyer assess the form of reorganization that best fits your company's situation.
This article is for reference only, based on the law in effect at the time of writing. Every business has its own facts and legal risks; please consult a DEDICA lawyer for advice tailored to your specific situation.
