Going through liquidation is a complex and often long lasting process. Failure to comply with existing regulations might result in severe legal consequences for shareholders.
Step 1: Notify the relevant authorities
Relevant authorities must be notified within 7 days once the liquidation process has started and the board decides to close the WFOE.
Step 2: Organise a liquidation committee
The registration authority must be provided with details of the committee members within 10 days after the committee is set up.
Formation of the committee must occur 15 days after the WFOE-Liquidation process has started.
Known creditors have to be notified and have to report their claims within the following 30 days after receipt of the notice.
Responsibilities of liquidation committee include:
Choose a member of the committee to be the legal representative
Prepare a balance sheet and detailed list of all assets
Formulate principles for properties evaluation and computation
Formulate and implement a liquidation plan
Pay debts, overdue taxes, outstanding wages and settle unfinished claims
Legally represent the company in civil lawsuits
Notify known creditors in written form
Prepare a liquidation report, subject to approval by the shareholder board
Step 3: Announce publicly that the WOFE will be resolved
An announcement in at least one provincial newspaper must be published within 60 days once the liquidation committee is set up.
Unknown creditors have to report their claims within 45 days as of the public announcement date.
Step 4: Submit liquidation report
Once all liquidation procedures have been completed by the committee, a liquidation report, including a WOFE dissolution application form and business license have to be submitted to relevant authorities.
Step 5: De- register with relevant authorities and close bank account
Tax authorities: De-registration with the local Taxation Bureau and State Administration of Taxation Bureau is required.
Customs Office: Business license, dissolution application and customs registration certificates must be submitted to the local Customs Office.
State Administration of Foreign Exchange (SAFE): Deregister with SAFE.
Industrial and Commercial Administration Bureau: Dissolution permissions and liquidation reports must be submitted to this authority.
To close the bank account, the dissolution application, the dissolution permission from the Industrial and Commercial Administration Bureau and other relevant document have to be submitted.
Within 2-4 months the WFOE will receive a “Notice of Cancellation” from the Tax Bureau (local and national) and the State Administration of Industry and Commerce.
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