Deregistering a Foreign-Invested Company in China

Deregistration is the lawful procedure a company applies for to leave the market. Legal personality ends by law, and shareholders are no longer liable for the company's debts after liquidation. Revocation is an administrative penalty imposed for unlawful operation (for example, failing to file annual reports for two consecutive years, being untraceable, or illegal business). A revoked company still has legal personality and must still complete liquidation and deregistration. Revocation damages the legal representative's personal credit (blacklisting and high-consumption restrictions), while voluntary deregistration carries no such penalty. Both end with deregistration, but voluntary deregistration is the compliant way out.

Yes. Under current law, whether registered capital is fully paid does not affect the company's right to apply for deregistration, and the registration authority should not refuse the application on that ground. Note, however, that during liquidation, if the company's assets are insufficient to pay all debts, subscribed but unpaid capital may be called in to repay them. We recommend stating in the dissolution resolution how the unpaid portion will be handled, and consulting a professional firm to assess the risks before starting deregistration.

Usually 2–6 months. Main milestones: (1) the 45-day newspaper notice period (a statutory minimum that cannot be shortened); (2) tax liquidation, about 2–4 weeks (depending on audit complexity and any back taxes); (3) liquidation audit and report, about 1–2 weeks; (4) business deregistration review, about 5–10 working days; (5) follow-up registrations, about 1–2 weeks. If the company has unpaid taxes, historical financial problems or unsettled import/export business, it may take more than 6 months. We recommend reviewing your tax and financial position in advance.

Yes, with conditions. Before deregistration the company must go through liquidation: first use company assets to pay all debts (employee wages, social insurance, taxes, supplier debts and so on); only the remaining assets may then be distributed in proportion to shareholdings. If capital was actually paid in at registration, the funds remaining after liquidation can be returned to shareholders. The foreign shareholder can apply to the bank to remit its statutory share offshore using the deregistration notice and liquidation report. If the company is insolvent, shareholders must make up their subscribed capital, and there are no residual assets to distribute.

No. Tax liquidation is a precondition for deregistration and must be completed before business deregistration. Specifically: (1) file current returns and complete the annual settlement for all taxes (VAT, corporate income tax, surcharges, stamp duty and so on); (2) pay any tax arrears; (3) close any open tax audit case; (4) obtain the Tax Clearance Certificate from the tax authority. Tax deregistration is the most important step in the process and the one most likely to run into problems. We recommend having a professional accountant or OTGEO handle the tax liquidation so nothing is left unresolved.

Yes. Once a company is lawfully deregistered, its former shareholders (including foreign ones) can set up a new company in China at any time, provided there is no record of illegality and no blacklisting before deregistration. If, however, the company was revoked rather than voluntarily deregistered, its legal representative is blacklisted and cannot serve as legal representative of another company for 3 years. So if a company stops operating, apply for deregistration rather than leaving it dormant. OTGEO can handle the entire deregistration and advise on setting up a new entity.