Foreign investment company in China may come to be liquidated in some stage, what’s the process of liquidation? and Is there some legal risks on the process? Lawyer Jingzhan.Wang will talk about the corporate liquidation.

Corporate Liquidation is the process of clearing the company’s credit and debit, when the cause for liquidation appears as per the laws or the charters of association.

If a company decides to liquidation by its board of shareholders, a dissolution panel shall be set up to charge the liquidation.

Firstly the dissolution panel shall examine all the property of the company and make scheme for dissolution

Secondly dissolution panel shall clear all the debit and credit.

Remaining assets may be distributed amont shareholders after clearing debit and credit.

The company, its controllers and the liquidation panel is supposed to be faithful and honest during the liquidation, strictly following the legal process as set by corporate laws and other related laws.

If not follow what the law asks them to do, they may be subject to punishment.

Article 163 of China Criminal Law provides the crime of hampering company’s liquidation. It says：In the process of Liquidation, if a company conceals its assets, records false information in its balance sheet or inventory of assets, or distributes the company assets prior to full payment of its debts, thus causing serious harm to the interests of the creditors or others , the persons who are directly in charge or responsible shall subject to criminal accusation