Horgos company dissolution, liquidation and deregistration has been a popular topic recently, especially for those companies in film and television industry. Data from local media outlet shows that since June, more than 100 film and television companies have filed applications to close their operations in Horgos. This follows a push by regulators to step up oversight of tax payments in the sector. Among those fleeing Horgos are many well-known celebrities who are legal persons or stakeholders of production companies.
Authorities Involved in Liquidation and Deregistration
Doing business will always have its success and failures. However, in the case where it really comes down to needing to liquidate your company, there are formal steps in which you should closely follow. The process is long, involving multiple application, de-registration and negotiations. The departments involved in the company deregistration are listed below:
1. Local Tax Bureau;
2. National Tax Bureau;
3. Customs Office;
4. Foreign Exchange Authorization;
5. Industrial and Commercial Administration Bureau;
6. Technology Supervision Bureau.
Procedures for Closing a Company in China
Stage 1:
1. Shareholders decide to liquidate Company;
2. Company selects a firm to assist with the process;
3. Preparation of related documentation;
4. Application for liquidation with the Bureau of Commerce ("BOC") and Administration of Industry & Commerce ("AIC");
5. Formation of a Liquidation Committee;
6. Pre-Liquidation Audit and compliance work completed.
Stage 2:
1. Public announcement issued in local newspapers;
2. Employees should be laid off (although certain key roles can be retained to assist with the liquidation;
3. Valuation and sale of company assets;
4. Creditors paid off;
5. Final Audit conducted (including all liquidation transactions).
Stage 3:
1. Businesses trading, importing / exporting across borders must deregister from China Customs;
2. Deregistration from the local governing Tax Authority;
3. Destruction of company chops and seals.
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.
Company’s deregistration in China is a long process, which involves a lot of paperwork. This long process depends a lot on the method of deregistration - voluntary or imposed, and also depends on the form of that company, and also on the reasons on which it is based the closure resolution. Tannet can help you with the proper completion of application forms, deregistering of certificates and answering & explaining to the tax authorities your actual situation.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, 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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