Exit the process as planned when losses occur: opt for simplified deregistration when possible, or file for bankruptcy if debts exceed assets — don’t leave things unattended.

23. Exit the process as planned when losses occur: opt for simplified deregistration when possible, or file for bankruptcy if debts exceed assets — don’t leave things unattended.

Cost: Simplified deregistration can be handled independently: just post the notice on the National Enterprise Credit Information Publicity System for 20 days. For businesses still owing debts, it’s necessary to first settle accounts — collect what’s due and pay off obligations; this step is called liquidation. Filing for bankruptcy requires an application to the court and typically takes several months. The real difficulty lies in the reluctance to face the situation after suffering losses, leading to procrastination.

In plain terms: If a business has no outstanding debts, unpaid wages, taxes, or social insurance dues, all investors can issue a written commitment; once posted for 20 days with no objections, simplified deregistration becomes possible. Individual businesses don’t need to post any notice — if no objections arise within 10 days, they can be deregistered directly. When debts cannot be repaid, bankruptcy should be applied for. Leaving things unattended, failing to submit annual reports for two years, and becoming unreachable at the registered address results in revocation of the business license; the responsible legal representative is barred from serving in such a role for three years.

Benefit: No debts owed to others, nor any owed to the business; all obligations — including wages, social insurance, and taxes — are fully settled. All investors have issued written commitments. Meeting these criteria allows simplified deregistration after a 20-day public notice period with no objections; individual businesses can be deregistered directly after 10 days with no objections. Companies unable to repay due debts and facing liabilities exceeding their assets may apply to the court for reorganization, settlement, or bankruptcy liquidation. If a dissolved company still has unpaid debts exceeding its assets, the designated liquidator must file for bankruptcy liquidation. Neglecting these steps brings serious consequences: failure to submit annual reports on time results in being listed as a business operating abnormally. Two consecutive years of non-compliance, coupled with being unreachable at the registered address, leads to license revocation; any individual responsible as legal representative is prohibited from holding such a role for three years. Businesses already listed as operating abnormally are ineligible for simplified deregistration nationwide.

Evidence grade: A

Sources: State Council of China (2021). Regulations on the Registration and Management of Market Entities (State Council of China Order No. 746, Articles 31, 32, and 33). (Revised in 2025) (Announcement No. 52 of 2025). <https://www.gov.cn/zhengce/zhengceku/202512/content_7053238.htm>; National People’s Congress Standing Committee (2006). Enterprise Bankruptcy Law (Articles 2, 7). <http://www.gov.cn/gongbao/content/2006/content_413952.htm>; State Council of China (revised in 2024). Interim Regulations on Enterprise Information Disclosure (Revised by State Council of China Order No. 777, Article 18): "If an enterprise is included in the list of operating abnormalities due to failure to submit annual reports as required for two consecutive years without correction, and cannot be contacted through the registered residence or business location, the business license shall be revoked by the market supervision and management department at or above the county level." Decision on amending and abolishing some administrative regulations (State Council of China Order No. 777). <https://www.gov.cn/gongbao/2024/issue_11246/202403/content_6941844.html>; Regulations on the Registration and Management of Market Entities (Article 12, Item 4) and Company Law (Revised in 2023, Article 178, Paragraph 1, Item 4): Anyone who serves as the legal representative of an enterprise whose business license has been revoked due to violation of laws and bears personal responsibility shall not serve as the legal representative, director, supervisor, or senior manager within 3 years from the date of revocation of the business license. <https://www.gov.cn/zhengce/zhengceku/2021-08/24/content_5632964.htm>; <https://www.gov.cn/yaowen/liebiao/202312/content_6923395.htm>

Notes: The Interim Regulations on Public Disclosure of Enterprise Information were revised via State Council Order No. 777 in 2024 and took effect on May 1; no further amendments have been made since. The former Article 17 — stating that businesses operating abnormally for three years would be added to the list of seriously law-violating enterprises — has been removed. Currently, the list of seriously untrustworthy enterprises applies only to entities found guilty of deliberate falsification in annual reports under severe circumstances. Many online sources still reference the outdated version, so care must be taken. As of now, individual bankruptcy mechanisms — applicable to individual businesses — are only being piloted in select regions; this section has not been cross-verified against original sources, hence is not included here.