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Dissolution & liquidation of foreign-invested enterprises in China - YouTube
Channel: International Lawyer in Shanghai, China
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Hi there, today I would like to talk
about dissolution and liquidation of
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foreign invested enterprises. The dissolution
and liquidation of foreign-invested enterprises
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is basically the same as that of
domestic-funded enterprises except that
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it needs to go through the approval
procedures of the commerce bureau;
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Chapter 10 "Company Dissolution and Liquidation"
of China Company Law applies.According
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to China Company Law, foreign-invested
enterprises may be dissolved due to the
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expiration of the operation term
stipulated in the articles of association
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or the resolution of the shareholders' meeting.
In addition, in case a foreign-invested enterprise
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is confronted with corporate deadlock, and its
continued existence will cause major losses to
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shareholders, which cannot be resolved through
other means, shareholders holding more than
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10% total shareholders’ voting rights of the
company may apply to the court for dissolution.
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The liquidation process of
foreign-invested enterprises
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(1) apply for dissolution and
liquidation to the commerce bureau;
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(2) establish a liquidation
team;(3) apply to the administrative
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department of industry and commerce for the
record of the liquidation team;(4) notify
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all known creditors and publish an announcement,
register and confirm the creditor's rights;
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(5) terminate employment contracts;(6) check
company’s property and conduct audits;(7)
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pay up taxes and go through the cancellation
procedures of taxation and customs registration;
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(8) prepare liquidation report;(9)
cancel of company registration;
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(10) the investor distributes the
remaining property and cancel the bank
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account;(11) cancel fiscal registration,
organization code, statistical registration,
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foreign exchange registration,
and social security registration.
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Some matters needing attention (1) the composition
of the liquidation team. According to China
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Company Law, the liquidation team of a limited
liability company is composed of shareholders,
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and the liquidation team of a foreign-invested
enterprise could be composed of three or more
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persons approved by the company’s authority.
The three or more members are not limited to
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the company's directors, supervisors or general
manager and other senior management personnel,
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and can also be any personnel
appointed by the company's authority,
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such as lawyers and ordinary company employees.
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(2) About employee placement The foreign-invested
enterprise that intends to dissolve
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should try to negotiate with the employees
to terminate the labor contract and
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reach a written agreement before submitting an
application for dissolution. This method can
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reduce the legal risk of the subsequent
liquidation process.(3) About taxation
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The taxation matters in liquidation are very
complex. Therefore, the liquidation team
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should communicate with the tax authorities
immediately after its establishment
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to confirm the specific
materials to be submitted.Thank
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you, thank you for watching. I am Charles
Shen, partner of Shanghai SunHold Law Firm.
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Should you have any legal questions, please
do not hesitate to contact us. thanks, bye
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