A variety of reasons may lead foreign investors to conclude that their Chinese subsidiary is no longer within the best interest of the group. However, when the company does decide to close its operations in China, it is essential to follow the proper company deregistration procedure to avoid any impact on the ability of the company to do business with China in the future.
We support our clients to take the appropriate steps to formally dissolve their company in China, ensure compliance with Chinese regulations on company liquidation and avoid penalties towards the company and its Director(s).
Through our company liquidation services we support with:
- Pre-liquidation planning and evaluation of business’ current circumstances to advise on optimal liquidation procedure.
- Advisory and support regarding termination of labor contracts, including evaluation of labor contracts, drafting of termination agreement and financial compensation for individual employees and registration with the local Chinese labor bureau.
- Disposal of company’s assets, preparation of balance sheet and assets list and settlement with creditors.
- Preparation of required documentation for company dissolution, execution of procedures for legal company deregistration and cancellation of business license and other relevant permits.
- Settlement of outstanding tax liabilities and negotiations with the in-charge tax authority during the company liquidation period.
- Closure of company bank accounts and repatriation of funds (if applicable).
Since the process of company liquidation in China is considered a complex and burdensome process, investors may consider applying as well for a dormant company status. Although a dormant company formally exists and must continue to meet certain administrative requirements, it does not perform unnecessary activities and therefore saves on company maintenance costs. The investor may decide to either re-activate the company in the future or perform a company dissolution process.
If you want to learn more about properly liquidating a company in China, please request a free copy of our company liquidation guide.
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