The State Administrative of Industry and Commerce of China (“AIC”) is going to carry out the reform of simplifying the de-registration of enterprises since Mar.1, 2017. After the reform, the formerly required application documents, including the investors’ resolution on dissolution, set-up of liquidation group, and liquidation report, are combined and simplified into the Commitment Letter of All Investors. The review and supervision of AIC will focus on the Commitment Letter of All Investors.
1. The enterprises eligible for the simplified de-registration procedure
s Enterprises with no business activities after getting business license;
s Limited liability companies with no outstanding creditor’s rights or debts before applying for the de-registration;
s Non-corporate enterprise legal person;
s Individual Proprietorship Enterprise;
For an enterprise that is ruled by the court to be liquidated compulsorily or declared bankrupt, the liquidation group or the management of such enterprise may, upon the court’s award on the termination of the compulsory liquidation or the bankruptcy procedure, apply to the original registration authority of the enterprise for the simplified de-registration.
s Foreign-invested enterprises that are subject to the Special Administration Measures on the Admission of Foreign Investment;
s Enterprises whose equity (investment interests) is frozen or pledged, or whose chattel are mortgaged;
s Enterprises under investigation, administrative compulsive measures, judicial assistance, or administrative penalty;
s Enterprises who have non-corporate branches that are not de-registered;
s Enterprises who applied for simplified de-registration but aborted;
s Enterprises that whose de-registration shall be approved beforehand according to laws, regulations, and the decisions of the State Council;
s Other circumstances.
2. The Simplified Procedure
2) AIC will forward such information to the tax, human resource and social security departments, and also MOFCOM in case of a foreign invested enterprise.
3) During the announcement period, any interested party and related government departments may raise an objection.
4) The enterprise may apply for simplified de-registration after the expiration of such announcement period.
To do so, the applicant is only required to submit the Application Form, Letter of Authorization of Representative, and the Commitment Letter of All Investors (Enterprises under compulsive liquidation or bankruptcy procedure shall submit the court’s award), and the original and duplicate of its business license. Formerly required documents are no longer needed, including the liquidation report, investor’s resolution, tax clearance certificate, record-filing of the liquidation group and the copy of the newspaper bearing the public announcement.
It is worth noting that the simplification of the application documents does not equal to a real cut-down on the liquidation work. By signing the Commitment Letter of All Investors, the investors make commitment on the settlement of liquidation expense, employee’s salary, social security expenditure, statutory compensation, and outstanding taxes payable, which means these tax clearance and employee severance works shall be completed beforehand.
Besides, the Commitment Letter of All Investors is the basis of the supervision, and the false representation might incur serious legal liabilities. In case an applicant conceal real information, its de-registration may be revoked by the authority and such enterprise will be listed in the Enterprise Blacklist for Serious Violations and Dishonest Acts which is published. The affected interested party may file a civil litigation towards the investors to claim their liabilities. In addition, investors’ violation of laws that constitute a crime will also be accused of criminal liability.