Those foreign companies that have started doing business in China need to know that a China company cancellation usually involves three key steps; dissolution, liquidation and deregistration.
It is necessary for the company to comply with all the rules and regulations that have been set in place for a smooth China company deregistration process. Thanks to the professional services provided by Business China, you can get a company deregistration in no time.
What Happens when a company does not Follow the China Company Deregistration Rules?
- According to the Chinese law, the responsible legal representative will be blacklisted and will not be able to even buy an air ticket and train ticket in China for the company.
- Any overdue penalties should be paid if the legal representative of the company applies for a license three years later.
- The legal representative of a company that has been revoked is not allowed to engage in any business activities for at least 3 years in China.
When Do You Need to apply for a China Company Dissolution?
It is crucial for all company dissolutions to comply with the legal requirements that have been stated under the PRC’s Company Law and the PRC’s Company Registration Administration Ordinance.
- Dissolution is required for the merger or division of the company.
- Shareholder’s Meeting or the sole shareholder of the one-person liability limited company decide to dissolve.
- The business license shall be revoked in accordance with the law, and the company shall be ordered to close or be revoked.
- The company was declared bankrupt in accordance with the law.
- The People’s Court demands the close of business.
- The Term of Operation prescribed in the Articles of Association or other dissolution events prescribed by the Articles of Association shall appear.
- Circumstances that have been stipulated by laws and administrative regulations.
When to Move for Company Liquidation?
To terminate an existing property or some other form of legal relation in China, a company is required to follow the legal procedures for the clearance, disposal or allocation of the company’s physical assets, along with the creditor’s rights, including all debts. Other than the dissolution of the company due to the company’s merger or division, or dissolution, should go through a liquidation process. The scope of a company liquidation shall be according to the company’s capital contribution, physical assets, claims and debts.
The purpose of the liquidation is to basically eliminate the rights and obligations which normally arise between the business entity and other social subjects, which provides a reasonable basis to carry out the termination of the company. In accordance with the Law of the PRC Company, all foreign businesses that are operating in China need to set up a liquidation group within the first 15 days from the date of the confirmation of the dissolution.
How to Proceed with a China Company Deregistration?
For those who are not familiar with a China company deregistration process, the following are some of the key factors to keep in mind;
- To Clear social security expenses and accounts in Social Security Bureau
- To clear unpaid taxes and charges in Tax Bureau
- Announcement on the major newspaper media to declare the cancellation
- Cancellation of the record and the business license
- Cancellation of corporate accounts
- Deregistration of other industrial licenses and qualifications
- Nullify the legal effect of the company seal
- Other necessary deregistration procedures
Our Services Cover
The good news for foreign businesses that are operating within China is that Business China is here to provide you with a whole host of professional services that covers all aspects of doing business in China. The following are just some of the professional services we offer apart from helping our clients with a China company deregistration process for WFOE;
• Prepare Auditing Report
• Establishment of Liquidating Group
• Tax Clearance
• Legitimate File Preparation for Deregistration