Q：
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What are the causes for the dissolution of a China company?
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A：
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A company may be dissolved under one of the following circumstances in accordance with Article 180 of the Company Law of the PRC:
1.
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the term of business operation as prescribed by the bylaw expires or any of the situations for dissolution prescribed in the company's bylaw occurs;
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2.
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the shareholders' meeting or the shareholders' assembly decides to dissolve the company;
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3.
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it is necessary to be dissolved due to merger or split of the company;
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4.
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the business license is cancelled, or it is ordered to close down or to be dissolved according to laws;
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5.
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Where the company meets serious difficulty in its operations or management so that the interests of the shareholders will face heavy loss if the company continues to exist and the difficulty cannot be solved by any other means, the shareholders who hold ten percent or more of the voting rights of all the shareholders of the company plead the court to dissolve the company.
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Q：
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When should a liquidation group be formed?
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A：
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According to Article 183 of the Company Law of the PRC, a liquidation group shall be formed within 15 days after the occurrence of the cause of dissolution so as to carry out a liquidation.
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Q：
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Whether a liquidation group is required upon the merger or split of a company?
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A：
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According to Article 183 of the Company Law of the PRC, a liquidation group is not required when the company is merged or separated.
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Q：
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Can a company carry out business activities during the period of liquidation?
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A：
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According to Article 186 of the Company Law of the PRC, the company continues to exist but may not carry out any business operation that has nothing to do with liquidation.
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Q：
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How should the company properties be distributed after the end of liquidation?
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A：
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After paying off the liquidation expenses, wages of employees, social insurance premiums and legal indemnities, the outstanding taxes and the debts of the company, the remaining properties may, in the case of a limited liability company, be distributed according to the proportion of capital contribution of the shareholders, or, in the case of a joint stock limited company, distributed according to the proportion of stocks held by the shareholders.
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FAQ
