In 2016, the State Administration for Industry and Commerce (‘SAIC') introduced a simplified de-registration procedure. Namely, the SAIC adopted ‘The Guidance opinions on comprehensively promoting the reform of simple de-registration of enterprises ( No. 253', (‘Guidance Opinions') on December 26, 2016. The simplified de-register procedure was further bolstered in 2018 and 2021 with the adoption of the Notice on strengthening information sharing and joint supervision ( No. 11) (‘Notice') and The State Administration of market supervision and The State Administration of Taxation on further improving the simple cancellation registration and facilitating the market exit of small, medium, and micro enterprises (‘Notice No.45'), respectively.
The simplified procedure offers a one-stop government service platform for eligible companies to de-register online, without submitting documents offline at the local bureaus – though local regulations and requirements may vary. Eligible companies are not required to form a liquidation committee or issue a newspaper announcement, rather an application with supporting documents is submitted online – thus saving costs and time.
To be eligible for simplified de-registration, companies are required to meet the following conditions:
- Hold no creditor's rights and debts or paid off creditor's rights and debts (except listed joint stock limited companies).
- Hold no claims and debts such as unsettled settlement expenses, employee wages, social insurance expenses, legal compensation, or taxes payable (late fees and fines).
- Investors shall authenticate the above conditions and bear the legal responsibilities in writing. In practice, the authentication is generated by the online platform once the information for de-registration is completed.
Once a company submits the information for simplified de-registration, a public announcement of the simplified de-registration will be issued through the National Enterprise Credit Information Publicity System. The online announcement will be disclosed online for 20 days (reduced from 45 days). During the publication time, the information will be shared with the relevant bureaus, such as labour, tax, social securities and so forth.
Before the company may proceed with the simplified de-registration application, the tax department will verify the company's tax status. The tax department may object the de-registration; however, no objection can be raised under the following circumstances:
- The company has not handled the tax related matters;
- The company has handled the tax-related matters but has not received the invoice (including issuing the invoice on behalf of others), no tax arrears and no other unfinished matters;
- The company has settled the tax payable and other tax clearance procedures for invoices paid and cancelled during the query.
After the publicity period, companies can directly apply to the market supervision department for simple de-registration. Companies shall apply within 20 days from the expiration of the publicity period and may apply for an appropriate extension according to the actual situation, which shall not exceed 30 days. Companies cannot engage in production and business activities unrelated to cancellation after the publicity.
Companies will not be approved to apply for simplified de-registration if any of the following abnormalities are discovered:
- The company is listed in the abnormal business operations:
- Equity (investment rights) is frozen, pledged or chattel mortgaged
- Non-legal person branch of the enterprise is still registered
Once the company resolves the abnormality, the application for a simple cancellation of registration will be publicised.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.