China company liquidation service
Hotline: 86-755-82147392, Email:info@citilinkia.com
Company law and the liquidation process
The procedures for closing a wholly foreign-owned enterprise (WFOE) – its dissolution and liquidation – are no easier or shorter than the process of setting up such a company, and normally take between 12 to 14 months to complete.
According to PRC law, a WFOE must be dissolved if any of the following circumstances apply:
Its term of operation expires
It experiences financial difficulties and the board deems it necessary to dissolve the company
It is unable to carry out its business due to major losses caused by force majeure
It is bankrupt
It is terminated by the government; for example because it commits illegal acts damaging the public interest
Dissolution of the company is necessary due to any merger or de-merger to which the company is a party to
Other reasons for dissolution stipulated in the original Articles of Association have occurred.
Solvent liquidations
Most Chinese Foreign Invested Enterprises (FIE) that are wound up are liquidated on a solvent basis. Why? Because most foreign institutions that have made investments in China want to preserve their reputations and ongoing relationships. Thus, to ensure a solvent liquidation, the shareholders must place sufficient funds in the company being liquidated to ensure all creditors are paid in full. We help companies prepare for a solvent liquidation including advising in relation to the timing and potential compensation required for early termination of contracts, strategies to dispose of assets and recover outstanding debts, and approaches to deal with tax, foreign exchange and other compliance issues. Our roles have involved:
acting as member of the liquidation committee;
advising the liquidation committee;
arranging for the termination of employees;
realising fixed and movable assets;
commencing litigation against delinquent debtors; and
obtaining the requisite approvals from various government departments including the tax and customs clearances required for de-registration.
How to deal with the company property?
The committee shall be responsible for liquidation of the company property and make the liquidation plan and report to the meeting of shareholders or the court (if the committee is designated by the court) for confirmation.
The company property shall be distributed as follows:
a) To pay liquidation expense;
b) To pay employee’s salary, social security fee and severance fee;
c) To pay outstanding tax;
d) To pay company debt;
e) To distribute among shareholders if there is any property left.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82148419, or emailing to info@citilinkia.com