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China WOFE Dissolution Guideline

Updated:2019-9-20 17:27:47    Source:www.tannet-group.comViews:63

China WFOE dissolution is called at China WFOE deregistration or cancellation. Key points and practical experience regarding the early dissolution and liquidation process of wholly foreign invested companies, including foreign invested enterprises owned by one sole foreign investor and those jointly owned by foreign investors.

 

To conduct liquidation of the WFOE is conditional upon the dissolution of the WFOE. In accordance with the Company Law, a company is dissolved due to the following reasons:
The term of operation specified in the articles of association of the company expires, or a dissolution event stipulated in the articles of association of the company occurs;
The shareholders’meeting makes a resolution to dissolve the company;
Dissolution is required due to merger or split-up of the company;
The company’s business licence is revoked, the company has been ordered to be closed down or is revoked according to the law;
The people’s court orders the company to be dissolved in accordance with Article 182 of the Company Law (where shareholder(s) on its own or jointly holding 10% or more of the voting rights launch a company dissolution lawsuit with the court).


Basic dissolution and liquidation process
As for WFOEs, the general steps of the early dissolution and liquidation process will be as follows (which are subject to minor adjustments depending on the specific circumstances):
Preliminary preparations such as preparing the shareholder resolutions, employee termination and compensation plan, appointment of liquidation committee members;
Obtaining the approval of the approval authority or filing with the approval authority;
Establishing the liquidation committee and filing with the company registration authority;
Notifying the creditors to declare their creditors’rights and publish announcement on early termination and entry into liquidation process;
Creditors declaring their creditors’rights;
Examining assets of the company and preparing the list of assets;
Preparing the liquidation plan and obtaining the shareholders’confirmation on the same;
Claiming creditor’s rights and paying off liquidation expenses and employees’remuneration/severance/social insurance contributions etc, paying off taxes and debts;
Preparing the liquidation report and submitting the same for the shareholders to confirm;
Allocating the remaining company assets;
Tax de-registration;
Customs de-registration;
Cancellation of the approval certificate;
De-registration with the company registration authority and conducting various other de-registrations (foreign exchange, social insurance, public housing fund etc);
De-registration of bank account(s).


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