The imbalance in management often occurs in large-scale enterprises, namely Limited Liability Companies and Joint Stock Companies. Full division and partial division are the reorganizations of an enterprise in order to improve business efficiency. However, at present, many businesses still do not fully understand the concept of full division and partial division as well as the distinction between these two activities. The following article will give readers a clearer view of the full division and partial division of businesses and distinguish these two activities.
1. What are full division and partial division?
1.1. Full division
Full division is the situation in which a Limited Liability Company or Joint Stock Company (the divided company) divides its assets, rights, obligations, and members/shareholders to establish two new companies or more. The company is divided through the resolution or decision of The Board of Members, the owner, or the General Meeting of Shareholders. The divided company shall cease to exist after the new companies are granted the Certificate of Enterprise Registration.
1.2. Partial division
Partial division is the situation in which a Limited Liability Company or Joint Stock Company may be partially divided by transfer of part of the divided company’s assets, rights, obligations, and members/shareholders to one or some new companies without ending the existence of the divided company.
2. Full division and partial division procedures
The procedure of these two forms of enterprise reorganization is almost indentical. Specifically, the steps for full division and partial division are as follows:
The Board of Members, the owner or General Meeting of Shareholders of the divided company shall ratify the resolution or decision on fully division/partial division of the company in accordance with the Law on Enterprise and the company's charter.
Within 15 days, send this resolution or decision to all creditors and employees.
Approving the charter, electing and appointing new titles along with new members. Then, apply for enterprise registration in accordance with the Law on Enterprise. The enterprise registration application of the new company shall be enclosed with the full division resolution/decision.
Documents to be prepared include:
As can be observed, these two types have nearly identical implementation steps. Therefore, depending on the situation of the company as well as the opinions of the members, consider and contemplate coming up with an appropriate plan of action in the future.
3. Comparison of full division and partial division
3.1. Similarities
It is hoped that the above content of full division, partial division and the comparison between the two will provide readers with a better understanding of these two activities. If you are still unclear about the regulations on full division, and partial division or have any questions that need further advice on legal issues related to these two activities, please contact the hotline +84-916-545-618 or email hung.le@cnccounsel.com and thanh.tran@cnccounsel.com.
