Shenzhen Company Liquidation Service
Hotline: 86-755-82143348, Email: amyhuang@citilinkia.com
Normally it is a foreign investor’s right to decide on the liquidation of its wholly-owned subsidiary in China. In practice however, many government authorities insist that such decision is supported by the company’s board of directors (or executive director).
When an Italian investor decided to liquidate its trading subsidiary in Ningbo, it initially gained the support of the company’s directors (which included the general manager and the legal representative), but nearly two years later the process was still not completed. The investor became suspicious, and entrusted us to investigate the company’s legal status. We discovered that the liquidation process had not yet been commenced.
The investor decided to force the situation. Preparations were made to replace all the existing directors, and board resolutions were prepared in which the new board of directors immediately and formally approved the liquidation and appointed the liquidation committee. The sitting directors were then given one final chance to cooperate, and under pressure they relented to pursue the liquidation immediately under close supervision of the investor’s advisors in China.
Under the Company Law, the decision to liquidate a company may be taken by shareholders representing at least two-thirds of the voting rights, though many companies adopt the articles of association, which stipulates that the decision to liquidate must be taken unanimously by either the shareholders or the company’s directors, or both groups. In practice, irrespective of the rules, many local authorities will in any event insist on a unanimous decision to minimize the risk of a shareholder’s dispute.
Contact Us
For further queries, please do not hesitate to contact ATAHK at anytime, anywhere by simply calling China hotline at 86-755-82143348, or emailing to amyhuang@citilinkia.com.