What Consequences will be ensued if NOT liquidated?
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Shenzhen company liquidation is the most arduous part is liquidation in the course of closing your business, which is expensive and time-consuming. In fact, there are many many companies that are dissolved without undergoing liquidation at all. This has posed a great deal of risks to companies that have dealt with such dissolved businesses. The law and relevant judicial interpretation from China Supreme Court have responded to such risks by imposing liabilities on shareholders of those companies who have failed to liquidate their companies properly.
(1) Not Liquidated and Not Deregistered
If the shareholders of a limited liability company or the directors and controlling shareholder of a company limited by shares fail to set up a liquidation committee to carry out the liquidation which inaction renders it impossible to liquidate the company because all assets, books and documents are missing or destroyed or mutilated, the shareholders will be ordered to assume the joint and several liability for the company’s debts and outstanding obligations.
If you have read it the post, you will further understand such impossibility is often discovered after creditor(s) institutes the compulsory liquidation proceeding at court. However, it is not a prerequisite condition to have the compulsory liquidation done in order to pursue the joint liability of shareholders or directors so long as the creditor plaintiff is able to prove that the failure to take action by such shareholders or directors has caused the impossibility of liquidation.
(2) Not Properly Liquidated
If the shareholders for limited liability company or controlling shareholder or actual controller and directors for companies limited by shares fails to form a liquidation committee within prescribed time which leads to the depreciation, loss, damage of corporate assets of the said company, or if such parties maliciously dispose of the corporate assets giving rise to loss by creditors of the company or such parties submit fake liquidation report for purpose of deregistering the company, creditors of the company shall be entitled to claim damages from such shareholders, actual controller and/or directors.
Importance Tips
The advice for foreign investors is that when you close your China business, it is advisable to comply with Chinese laws and regulations in relation to business dissolution, liquidation and deregisteration. You may turn to a professional agency to handle such matter. Tannet, with almost 20 years of history and over 60,000 clients, is willing to assist you in the whole incorporation and operation 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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