Company Deregistration in China

For whatever reason, investors in China may be faced with

the decision to cease their company’s operations. Economic

circumstances change rapidly, and the business assumptions that

underlie the investment may have proven flawed.

In such a situation, it may be tempting to simply walk away from the

entity in China and cut one’s losses. For a variety of reasons, this

can be ill-advised.

The Chinese government imposes severe sanctions on investors who

do not properly deregister their company, including barring companies

and individuals from doing business in China.

Closing down a company requires both time and cost – simply

walking away might seemingly save the investor these expenses in

the short term. However, for investors with a future perspective on

doing business in China or looking to close potentially significant

liabilities, deregistering properly will pay off in the long term.

With the option of doing future business in China at stake, it is

beneficial for a company to carry out its deregistration in the

prescribed manner. This report includes a step-by-step guide to the

deregistration process.

HR concerns are a particularly sensitive issue. Suddenly saddling

the community with a large number of unpaid terminated workers

may damage relations with the local government. Part of this report

describes how to deal with the matter, and what each party’s rights

and obligations in such a situation are.

Kyle Freeman, Associate with the International Business Advisory

division in Beijing, answers some of the common questions foreign

investors have when deregistering a business in China.

Should you have further questions, or would like to make an

appointment to discuss the circumstances of your business in more

detail, please

INTRODUCTION

ALBERTO VETTORETTI

Managing Partner

Dezan Shira & Associates