China company cancellation may occur when shareholders decide to terminate the company, due to difficult business operation or financial crisis which cannot be dissolved. After canceling the company's liquidation in accordance with the following procedures, the company can then cancel the registration and announce the termination.
General Procedures for Deregistering a Company in China
1. Set up a liquidation group according to law.
The company shall set up a liquidation group within fifteen days from the date of dissolution, and begin liquidation. The liquidation group of a limited liability company is composed of shareholders, and the liquidation group of company limited by shares is composed of personnel determined by the directors or the shareholders meeting. If the liquidation group fails to establish liquidation within the time limit, the creditor may apply to the people's court to appoint the relevant personnel to form a liquidation group. The people's court shall accept the application and organize the liquidation group to conduct liquidation in time.
2. Declaring and notifying creditors to declare their claims and register their claims according to law.
The liquidation group shall notify the creditor within ten days from the date of its establishment, and announce it in the newspaper within sixty days. The creditor shall, within thirty days from the date of receipt of the notice, declare the creditor's right to the liquidation group within forty-five days from the date of the announcement. When the creditor declares the creditor's right, he/she shall explain the relevant matters of the creditor's right and provide the proof materials. The liquidation group should register the creditor's rights. During the period of declaring creditor's rights, the liquidation team shall not repay the creditor.
3. The liquidation group takes over the company and proceed liquidation process.
The liquidation group, from the date of establishment, takes over the company, liquidate the company's unfinished business and settle the company's creditor's rights and debts, handle the remaining property after the company has paid off its debts, settle the unpaid taxes and those generated in the process of liquidation, as well as attend the civil litigation activities on behalf of the company.
4. The liquidation team comprehensively cleans up the company's property, prepare the balance sheet and the property list.
5. The liquidation group makes liquidation plans and reports to the board of shareholders, general meeting of stockholders or the people's court for confirmation.
After liquidating the property of the company, preparing the balance sheet and the property list, where the liquidation group finds that the property of the company is insufficient to repay the debts, it shall shall apply for declaration of bankruptcy to the people's court according to law. The liquidation group shall transfer the liquidation affairs to the people's court after the company has been declared bankrupt by the people's court.
6. Distribution of the company's property according to the liquidation plan approved by the board of shareholders, general meeting of shareholders or the people's court.
For the remaining property of the company after the payment of the liquidation expenses, wages of employees, social insurance premiums and the statutory compensation, payment of taxes owed, and debts of the company, the limited liability company allocates according to the proportion of the shareholder's contribution, while the company limited by shares allocates according to the proportion of shares held by shareholders. During the period of liquidation, the company survives, but shall not carry out business activities unrelated to liquidation. The company's property shall not be assigned to shareholders before it is liquidated according to the provisions of the preceding paragraph.
7. After the liquidation report is prepared and submitted to the board of shareholders' meeting, general meeting of shareholders or the people's court, the company shall apply for cancellation of the company registration and the announce the company's termination. After the liquidation of the company, the liquidation group shall make a liquidation report, which is confirmed by the board of shareholders' meeting, general meeting of shareholders or the people's court, and submitted to the company registration authority to apply for cancellation of the company registration and announce the company's termination.
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