Case Sharing by Dongjin – FIE Must Confirm Whether Corporate Executives Can Cooperate in Signing Relevant Documents Before Cancellation!

A Sino-foreign joint venture in Shanghai - Company A has been established for more than 10 years. However, due to poor business operations in recent years, it has been suspended for more than 2 years. Now the headquarters of foreign party has decided to officially initiate the application process for the cancellation of Company A.

To reduce expenses, Company A decided to have the internal staff execute the cancellation process. However, due to lack of relevant experience, Company A staff completed the filing registration of all 5 board members as liquidation team members in a routine manner. But in the subsequent liquidation process, it was found that 4 out of the 5 board members were unwilling to cooperate in signing the relevant documents.

The articles of association of Company A stipulate that the board of directors is the supreme power institution. Since the board of directors of Company A cannot issue a board resolution to revoke the filing of the liquidation team, it is impossible to change the board members, which leads to the inability of Company A's liquidation process to continue normally.

In order to avoid being listed in the blacklist, Company A can only continue to increase capital and invest in operating costs to maintain the existence of Company A.

In view of this, we suggest that FIE planning to cancel should confirm in advance that the relevant corporate executives can cooperate in signing the relevant documents before the filing registration of the liquidation team, to avoid the enterprise falling into a predicament where it cannot continue to cancel normally.

If the enterprise encounters any doubts or needs professional advice during the cancellation process, please feel free to contact us for consultation at any time.

Mike Chang

Partner

mikechang@shanghaiinvest.com