Company deregistration happens when shareholders decide to terminate the company, due to difficult business operation or financial crisis which cannot be dissolved. In China, the procedure for company deregistration is rather complicated, particularly in face of mainland customs and tax departments.
I. Motives for the Company Deregistration
It is important to keep in mind that liquidation does not always occur for negative reasons such as bankruptcy. A company may also seriously consider liquidation for strategic reasons.
1. A resolution for dissolution is made at a meeting of a company’s shareholders.
2. A company is absorbed in a merger or has been separated from the controlling entity.
3. Expiration of business operations.
4. The business license has been revoked by the government / an order for closure has been issued or the business license has been ordered-to-be-closed or cancelled by the government in the public’s best interests due to determined legal violations (such as negative environmental impact or catastrophic malpractice).
5. A company undergoes financial difficulties and cannot anticipate transforming the business to deliver future profitability.
6. Force Majeure such as fire, natural disaster, warfare or changes in government regulations etc. enforce the liquidation of the company.
7. A company decides to relocate all or a division out of China to another country, to take advantage of: cheaper labour, a more relevantly skilled talent pool, a more supportive political environment etc. This may necessitate the company to liquidate all of their assets in China.
II. Required Materials for China Company Deregistration
The registration of the company needs to be applied and transacted in accordance with the established procedures, and the company deregistration also needs to follow the corresponding procedures for processing. The details of the company's deregistration in China are described below.
1. Deregistration application signed by the head of the company’s liquidation group;
2. Company deregistration application signed by the legal representative of a corporate;
3. Court-declared bankruptcy, files ordered to be closed by relevant organs, or resolutions or decisions made by the company in accordance with the Company Law;
4. Liquidation report confirmed by the board of shareholders or the relevant organ;
5. Tax paid proof issued by the tax department;
6. Account cancellation certificate issued by the banking department;
7. Both the original and the copy of Business License for Legal Person;
8. Other documents required by law and new rules and regulations.
III. China Company De-registration Procedure
In China, the procedure for company de-registration is rather complicated, particularly in face of mainland customs and tax departments compare to register a new company.
1) Shareholders decide to liquidate Company;
2) Company selects a professional firm to assist with the process of de-registration;
3) Preparation of related documentation such as resolution for termination of the Articles Of Association (‘AOA”), application letter, liquidation committee list, resolution of shareholder for company de-registration and the liquidation team and other sort of document required by relevant authorities;
4) Application for liquidation with the Bureau of Commerce (“BOC”) and Administration of Industry & Commerce (“AIC”);
5) Formation of a Liquidation Commitee;
6) Public announcement issued in local newspapers;
7) Employees should be laid off;
8) Valuation and sale of company assets;
9) Creditors paid off;
10) Final Audit conducted (including all liquidation transactions);
11) Businesses trading, importing / exporting across borders must de-register from China Customs;
12) Deregistration from the local governing Tax Authority;
13) Destruction of company chops and seals.
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