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China Company Cancellation: Consequence on Improper Liquidation

Updated:2018-10-24 15:22:32    Source:www.tannet-group.comViews:319

China company cancellation also refers to China company liquidation, China company dissolution or China company deregistration. Many foreign businesses in China do very well and are profitable. However, there will always be some that do not succeed commercially, or that may have to close their business. In China, the procedure for company deregistration is rather complicated, particularly concerning compliance to China Customs and the Tax Authority. And severe legal consequences will be incurred if improper procedures are involved.

China company cancellation goes through three key steps to close the business, i.e. dissolution, liquidation and deregistration. All in all, the company cancellation in China should comply with the China Company Law and other related regulations.

Normally, when a license is revoked, the following is required:
1. The company must immediately cease doing business. This means, for example, that all websites and other public announcements where the company offers to do business in China must be taken down.
2. The official company seals must be collected and deposited with the licensing authority.
3. All taxes and fees owed to the national and local governments must be paid.
4. All salary owed to employees must be paid.

The legal representative and the directors of the company must immediately liquidate the company in accordance with the China Company Law and local procedures. All company assets must be used to pay creditors in accordance with the liquidation procedure. Use of the company assets for any other purpose is a crime.

Legal Consequence on Improper Liquidation
1. As legal representative, you will not be permitted to act as a director, manager or supervisor of a Chinese company for at least three years from the date of revocation.
2. The responsible legal representative will be blacklisted and cannot buy air ticket and train ticket in China for the company that has not been revoked as required.
3. The shareholders of the company will not be permitted to invest in another Chinese company for at least three years from the date of revocation.
4. The name of the company cannot be used for at least three years from the date of revocation.
5. The name of the company, the representative director, the shareholder and the directors (and perhaps others tied to the company) will be placed on a national black list maintained by the Chinese police, border control authorities and State Administration for Industry and Commerce (SAIC).

In conclusion, deregistering your company in China in line with the legal procedures are of great importance. If you think the cancellation process is too time-consuming and troublesome, Tannet is glad to assist. Our professional financial and tax advisors can help you prepare auditing report, establish liquidating group, conduct tax clearance, and prepare legitimate file for deregistration. We can take care of the whole process.

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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