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China Company Liquidation Guide

Updated:2018-5-29 17:14:39    Source:www.tannet-group.comViews:94

China company liquidation is a common issue for business individuals and enterprise, as doing business will always have its success and failures. In the case where it really comes down to needing to liquidate your company, there are formal steps in which you should closely follow. For investors with a future perspective on doing business in China or looking to close potentially significant liabilities, deregistering properly will pay off in the long term. Tannet can help you cope with this long and complicated procedure.

Procedures for Company Deregistration in China
1. Liquidation
In order to terminate existing property and other legal relations, the company shall, in accordance with the legal procedures, clear, dispose and allocate the company's property and creditor's rights and debts. Apart from dissolution of the company due to merger or division, the dissolution of the other causes shall be through the liquidation procedure.

The scope of the liquidation of the company shall be the examination of the company's capital contribution, assets, claims and debts. The purpose of the liquidation is to eliminate the rights and obligations arising between the company and other social subjects, thus providing a reasonable basis for the termination of the company.

2. Deregistration
Once the post-liquidation audit report has completed, the deregistration processes can then commence. Certificate approval, business licenses, tax registration certificate, foreign exchange certificates, financial certificates, statistical certificates will all need to be filed for deregistration. This will involve various authorities such as the Ministry of Commerce, the State Administration of Industry and Commerce, the customs administration, the tax authorities and the State Administration of Foreign Exchange.

3. Distribution of Funds and bank accounts closing
To tie up loose ends, the remaining funds after deregistration should be then distributed to the shareholders and all company bank accounts should be closed down.

Consequences of Non Duly Liquidation
Non-duly liquidation can come from a spectrum of different activities. These include: bad faith asset disposal, failure to file Liquidation Audit Report, failure to properly notify creditors of the liquidation proceedings, as well as unpaid taxes, debts, salaries or social insurance contributions. The consequences depend on the action, but can generally result in fines, imprisonment and asset confiscation.

However, it’s not just about immediate penalties. Non-duly liquidation can become a barrier for future investments in China. In fact, to prevent foreigners just leaving China and their unfinished business behind, the Chinese government has prohibited individuals that face civil lawsuits, criminal charges or have unfulfilled employee payment obligations to leave the country. This means that fleeing individuals can face the probability of a travel restriction that may lead to freezing of assets and a no-departure restraining order.

Contact Us
If you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512 or 86-755-82143181 or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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