Company Liquidation in China

Company liquidation in China is a process where our local experts can guide entrepreneurs regarding the procedures implicated. As such, if winding up a company in China concerns you, feel free to find out the formalities that must be followed from the very beginning, from our attorneys in China.

Types of company liquidation in China

A company in China can be liquidated for a number of reasons and there are two types of liquidation – voluntary and compulsory. The first type of liquidation occurs when the company has fulfilled its business operation term, as described in the articles of association, or if any other conditions described in this document are met by the company.

The resolution for company liquidation in China is made by the company’s shareholders during a special meeting. Another reason why a company can cease to exist in China is the merger with another company and the complete assimilation.

Compulsory company liquidation in China can be ordered by a court or a higher regulatory body in China that decides the company must be closed or revoke its business permits. The business can be forced to stop its activities, for example, if its business license is revoked by the Chinese Government. 

Shareholders have an important role in the decision to dissolve a company. They can decide to do so if the company suffers from great loss and any further continuation of its operations would bring the shareholders even greater losses.

We invite you to watch a short video about how you can liquidate a company in China:

How is the liquidation process of a company done in China?

Every license or permit the company has obtained during its active time will need to be deregistered. The certificate of approval, the business license or licenses, the tax registration certificate, or any financial certificates and other documents will be canceled as the company will no longer be a registered legal entity in China.

If the liquidation is voluntary, the company, specifically its shareholders, can be the ones to oversee the liquidation procedure and the distribution of the assets. However, it is best to seek the services of a professional and accredited liquidator in China. In case of compulsory liquidation, the process will be supervised by an administrator appointed by the court. Contact us for more information about company liquidation in China.

Our lawyers in China can help you with tax advice and planning for any outstanding taxes that may arise after the liquidation process is commenced. We can provide detailed assistance for company liquidation in China.

Closing a WFOE in China, helped by our Chinese lawyers

Wholly Foreign Owned Enterprise or WFOE is the most popular business structure in China and is highly appreciated by foreign entrepreneurs. Regarding the liquidation of such a structure, we present some information below:

• Winding up a company in China, especially a WFOE requires the involvement of the representative office and relevant authorities.
• In the company liquidation of a WFOE in China, business scope, activities, size, and many more are taken into account.
• A liquidator is appointed in charge of verifying and selling company assets.
• The process starts with a prior notification, following the shareholders’ decision to close a company in China.
• The liquidation report is sent for registration with the local authorities. In addition to this report, balance sheets of the company, property evaluation, and other relevant documents are also requested.
• The State Administration for Market Regulation (SAMR) is the authority that receives the liquidation documents of a company, in this case, the resolution.
• The representative of the WFOE in question must make a public announcement and notify the creditors in no more than 45 days.
• A simplified deregistration of a WFOE in China is possible, however, legal advice is required.

We invite you to speak with our Chinese lawyers and learn more about company liquidation in China. We can advise you in detail about what winding up a company in China entails.

Chinese Company Law changes for 2024

The recent amendments brought to the Chinese Company Law include, among others, several procedures for company liquidation in China. For example, a WFOE in China can be closed if there are no debts or if these were paid before the start of the process. The liquidation process can commence after 20 days from the date when the announcement of the company closure was made if there are no restrictions or complaints during this time. Moreover, winding up a company in China can take around 20 days from the date of the decision registered with the relevant authorities.

Statistics about companies in China

Here are some statistical data about the number of companies that ceased their activity in China in 2023, after having been active in the chip production sector:

• A record was set in China in terms of chip manufacturing companies. About 10,900 of such companies were closed in 2023.
• These data indicate that around 30 companies of this type stopped their activities every day in 2023.
• Meanwhile, about 3,243 existing chip manufacturing companies in China received governmental incentives in the same year.

We specify that in addition to legal services for closing a company in China, our lawyers can also help you with other problems. Our divorce lawyers in China are at your disposal with specialized legal advice. We can also guide you in the process of immigration to China. You will need support in obtaining residency in China. Moreover, you can choose our services to apply for citizenship in China. As for the business environment, we recommend legal assistance for trademark registration in China. So, please contact our law firm in China for tailored legal services at affordable prices.