Shenzhen Commercial Entities May Apply for Business Suspension Now
According to the Company Law of the PRC, if a company voluntarily suspends operations for more than 6 consecutive months after opening, its business license will be revoked by the registration authority. Such provision is really unfriendly to companies that are temporarily in financial difficulties and unable to operate normally, but do not intend to close down. In this regard, the registration of business suspension is introduced for the first time in the revised Business Registration Rules in Shenzhen Special Economic Zone (hereinafter referred to as the Rules). The new Rules have come into force on 1 March 2021. According to Article 25 of the new Rules, if a commercial entity intends to suspend its business, it may register with the business registration authority for suspension of business, and the business entity shall survive during the suspension period. The following section provides a brief introduction to the registration of business suspension in Shenzhen.
- Requirements
The commercial entities that intend to apply for the registration of business suspension shall meet the following requirements:
(1) has been established for more than one year and the suspension period does not exceed the term of operation;
(2) has not been included in the list of abnormal operation or the list of serious violation of law and dishonesty;
(3) no lock restriction or warning information;
(4) no information of law enforcement;
(5) no information for assistance in court execution;
(6) no pledge of equity.
- Service of Legal Documents
During the suspension period, the registration authority will make electronic service through the e-mail address provided by the commercial entities. The lease of operation premises should no longer be required under such circumstance.
- Annual Report
During the suspension period, the registration authority will file the relevant data of annual report based on the registered information in its system as authorized by the commercial entities.
- Filing of Tax Returns
Up to now, the Shenzhen Tax Bureau has not announced any exemption on the filing of tax returns for commercial entities that have applied for the registration of business suspension with the registration authority. Therefore, the commercial entities that have applied for the registration of business suspension are still required to file tax returns to the competent tax authorities during the suspension period.
- Restrictions
During the suspension period, commercial entities shall not engage in any business activities or use their business licenses to participate in other activities such as house purchase, car plate lottery, application for special fund support, and so on. No equity transfer, change of registered capital or business scope is allowed as well.
- Termination of Business Suspension
If a commercial entity intends to resume business activities during the suspension period, it shall apply to the registration authority for termination of business suspension before resuming business activities. The suspension period shall not exceed 2 years. A commercial entity shall, within 30 days from the date of expiration of the suspension period, apply for the termination of business suspension with the registration authority.
If a commercial entity fails to apply for termination of business suspension for more than 6 months upon expiration of the suspension period, it shall be deemed as "voluntarily suspended operations for more than 6 consecutive months". The business license of the commercial entity shall be revoked by the registration authority in accordance with the Company Law of the PRC under such circumstance.
KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.
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