Implementation Measures for the Compulsory Deregistration of Company Registration in China
Recently China’s State Administration for Market Regulation (SAMR) issued the Implementation Measures for the Compulsory Deregistration of Company Registration (Order No. 105), which will take effect on October 10, 2025. This new regulation sets out a clear legal framework for when and how authorities can forcibly deregister companies that fail to properly exit the market.
Why this matters
China has long struggled with so-called “zombie companies.” These are entities that have ceased operations but remain on the books, often with revoked licenses or unresolved legal disputes. Such inactive companies create risks for creditors, distort market data, and reduce transparency. The new measures are designed to strengthen the exit mechanism, improve the credibility of the business environment, and ensure that unresponsive or abandoned companies are formally cleared from the system.
Key provisions
Scope of application
Companies whose business licenses have been revoked, ordered to close, or annulled.
If no deregistration application is filed within 3 years, the registration authority may start compulsory deregistration.
Public announcement process
Before deregistration, authorities must issue a 90-day public notice on the National Enterprise Credit Information Publicity System.
The notice will include company name, legal representative, registration number, legal grounds, and procedures for objection.
Objections allowed
Creditors, regulators, or other interested parties can raise objections during the announcement period.
Valid objections (e.g. ongoing debts, lawsuits, or liquidation obligations) will halt the process.
Deregistration decision
If no valid objections are raised, authorities issue a Compulsory Deregistration Decision within 10 working days.
This decision is then disclosed publicly, and the company is considered legally terminated.
Reinstatement of registration
If a deregistered company still has unresolved issues — such as ongoing lawsuits, investigations, or liquidation — stakeholders can apply for reinstatement within 3 years.
Authorities may also reinstate a company to protect national or public interests.
Liability after deregistration
Shareholders and liquidation obligors remain responsible for debts and obligations, even if the company is forcibly deregistered.
Penalties for abuse
Submitting false materials or using the objection/reinstatement process to gain improper advantage may result in fines of up to RMB 100,000.
Implications for foreign investors
- Dormant entities at risk: WFOEs, JVs, or representative offices that have been inactive or non-compliant for over three years may be subject to forced deregistration.
- Creditors’ rights: The measures strengthen protection for creditors, who now have a formal channel to object and safeguard claims.
- Compliance reminder: Foreign shareholders remain liable for outstanding debts or obligations even after deregistration. Companies that wish to exit China should complete proper liquidation rather than risk forced removal.
Conclusion
The new compulsory deregistration measures reflect China’s ongoing efforts to clean up its corporate registry and enhance business transparency. For foreign investors, this means greater accountability and fewer chances for companies to remain idle in the system.
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