Foreword

During the spread of the novel coronavirus, many companies will not survive the economic winter, and it may be a helpless but wise choice to withdraw from the market.With the continuous improvement of China's credit investigation system, just to shut down business without liquidation will bring endless troubles to enterprises and investors.

Compared with compulsory bankruptcy liquidation, enterprises should consider independent liquidation to gain the initiative to exit the market and minimize the follow-up responsibility of investors.With more than ten years of experience in corporate bankruptcy and liquidation, Shanghai Nuo Di Law Firm brings you the legal questions and answers related to independent liquidation.

Question 1: In what circumstances does the company need independent liquidation?

Answer:  According to the provisions of the Company Law, the company shall set up a liquidation team to conduct independent liquidation when:

1. The expiration of the business term or other causes for dissolution as stipulated in the Articles of Association of the company;

2. The shareholders' meeting decides to dissolve;

3. Its business license is revoked, it is ordered to close down or it is revoked according to law;

4. The court dissolved the company in accordance with the shareholders' claim for dissolution.

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Question 2: How to conduct independent liquidation?What is the process?

Answer: The general process of independent liquidation is as follows:

1. Causes of independent liquidation occur;

2. The resolution of the shareholders' meeting is to form a liquidation team, appoint the person in charge of the liquidation team and its members, or entrust professional personnel to handle liquidation affairs;

3. Submit to the Administrative Department for Industry and Commerce for liquidation and filing, carve the liquidation group seal as required, and establish the liquidation account;

4. Transfer the company's property, financial account books, creditor's right list and debt list to the liquidation team, and make sure to well deal with employees’ dimission and house leasing relationship;

5. Publish liquidation notices in eligible newspapers according to law, and publish them at least three times within 45 days.

6. The liquidation team shall register the creditor's rights, prepare the company's property inventory, balance sheet, creditor's rights inventory, debt inventory and liquidation plan;

7. Organize the shareholders' meeting to vote for the liquidation plan;

8. Convene creditors' meeting in a timely manner;

9. Liquidate assets and clear claims according to the liquidation plan;

10. Payment of liquidation expenses;

11. With reference to the provisions of the Bankruptcy Law, pay off debts in the following order: salary and compensation of employees, unpaid social insurance premiums, taxes and general debts;

12. The remaining property shall be distributed to shareholders according to the shareholding ratio of the company;

13. Apply for cancellation to the Administrative Department for Industry and Commerce.

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