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Implementing Rules of Regulations of Shenzhen Special Economic Zone on Liquidation of Enterprises

Implementing Rules of Regulations of Shenzhen Special Economic Zone on Liquidation of Enterprises

(Promulgated by decree No.72 or Shenzhen Municipal People' s Government on May 29, 1998)

        Article1 These implementing rules are hereby formulated according to Article 58 of Regulations of Shenzhen Special Economic Zone on Liquidation of Enterprises (hereinafter referred to as"the Regulations").
        Article 2 The enterprise legal persons as mentioned in Article 2 of the Regulations include limited company, stock limited company, stock cooperative company and enterprise legal person in other forms.
        Article 3 Item 4, paragraph 1, Article 4 of the Regulations includes the following situations:
        (1) being revoked of business license of enterprise legal person;
        (2) being terminated due to the judgment of the court;
        (3) being terminated due to the arbitration award; and
        (4) other situation as stipulated by laws.
        Article 4 In case that the enterprise being deregistered or ordered to closedown and failing to submit relevant liquidation written materials at the time fixed by the Regulations, results in suspension of liquidation, the date of commencement of the liquidation of the enterprise shall be the date as of fixed by Item 5 of Article 6 of the Regulations.
        Article 5 The written materials in Article 8 of the Regulations include:
        (1) any of the following documents: the decision or resolution being made by the authority of the enterprise on termination of the enterprise; the judgment of a court or the award of an arbitration body on the termination of the enterprise; the decision made by an administrative body on the deregister or closedown of the enterprise according to law;
        (2) copy of business license of the enterprise legal person;
        (3) certificate of identification of investors; and
        (4) financial statement of the enterprise at the time of its termination.
        Article 6 According to Paragraph 1,Article 10 of the Regulations, in case the liquidation needs to be deferred, the liquidation group shall apply to the Liquidation Authority in written form within 30 days before the expiration date of the period deadline on the liquidation. The Liquidation Authority shall make a decision of approval or disapproval within 15 days from receipt of the written application.
        Article 7 Other reasons mentioned in Paragraph 2, Article 10 of the Regulations include arbitration, force majeure and accident.
        In case of suspending or resuming the period of liquidation, the liquidation group shall make a decision and submit it to the Liquidation Authority for approval.
        Article 8 The enterprise application mentioned in Paragraph 2, Article 12 of the Regulations refers to that the authority of the enterprise apply to the Liquidation Authority. In the case of applying, the enterprise shall provide the following materials besides the ones required in Article 5 of these implementing rules:
        (1) recent balance sheets of assets;
        (2) materials relevant to the litigation or arbitration being in progress; and
        (3) Other materials required by the Liquidation Authority°£
        Article 9 In case the liquidation is organized by the Liquidation Authority, the enterprise or investors shall pay certain amount of the liquidation expenditures in advance, which is decided by the Liquidation Authority in accordance with the Item 1 to 3,Article 36 of the Regulations.
        The liquidation expenditures paid in advance by the applicant shall be stored in the special bank account opened by the Liquidation Authority beforehand. After the founding of the liquidation group, the expenditures and interests shall be passed on to the liquidation group and the Liquidation Authority shall supervise and administer the liquidating costs of the liquidation group.
        Article 10 The leader of the liquidation group shall be appointed by the Liquidation Authority in case the group is organized by the Liquidation Authority according to Article 14 of the Regulations.
        Article 11 The powers and duties of the leader of the liquidation group are as follows:
        (1) in charge of the overall work of the liquidation group;
        (2) to decide the time, place and topic for liquidation group's meeting;
        (3) to convene and chair the meeting;
        (4) to supervise and urge members of the liquidation group to accomplish the liquidation on time; and
        (5) to report the progress of the liquidation to the investors in time in case the liquidation is organized by the enterprise; to report the progress of the liquidation to the Liquidation Authority in case the liquidation is organized by the authority. The leader of the liquidation group shall be replaced by the authority of the enterprise or the Liquidation Authority in case he does not perform his powers and duties.
        Article 12 The investors who refuse to join the liquidation group or perform the liquidation duties shall not affect the progress of the liquidation in case the liquidation group is organized by the Liquidation Authority in accordance with Article 14 of the Regulations,
        Article 13 Other legal reasons mentioned in Item 3, Article 15 of the Regulations include:
        (1) in violation of the practicing discipline or professional ethics which results in serious consequence;
        (2) incapability of performing duties due to incapacitation, illness, travel and so on; and
        (3) Nonperformance of liquidation duties, hindrance of progress of the liquidation.
        Article 14 The members of the liquidation group shall sign on the record of the liquidation group's meeting and the decision of the meeting. The decision of the meeting made by the liquidation group according to law shall have binding force on liquidation.
        Article 15 The liquidation group shall submit a written explanation of the surplus, deficit, sale, unperformed credits and gains, ect. During the liquidation period to the authority of the enterprise, and reckon them in the liquidation' s profit and loss. The liquidation group organized by the Liquidation Authority shall report the items above to the Liquidation Authority.
        Article 16 The following rules shall be carried out in the case of estimating and evaluating the liquidation assets:
        (1) if a court judgment or an arbitration award rules for termination of the contract, the estimation and evaluation shall be carried out according to the judgment or award;
        (2) the relevant rules, if there is any, in a contract of the articles of association, such rules shall be carried out; and
        (3) if there are not any such rules mentioned in Paragraph 2 of this article, negotiation on settlement between the investors shall be required. If the investors can not reach mutual agreement, the liquidation group shall make decision according to the estimating price which provided by a legal assessment body.
        Article 17 Any assets of the enterprise to be sold off by the liquidation group, shall be transferred publicly and to the buyer that offers the highest price. The investors have the priority of buying under the same condition.
        Article 18 The liquidation group set up by the Liquidation Authority, shall report to the Liquidation Authority to put on record in case it files a litigation or applies for arbitration.
        Article 19 The liquidation group set up by the Liquidation Authority, shall notify the investors after working out the balance sheets and the list of assets according to Article 33 of the Regulations. The investor has the right to look up the balance sheets within the time limit made by the liquidation group and pose the written opinion in case he has objection. The liquidation group shall decide whether to accept the investor' s written opinion or not and send the balance sheets and the list of assets to the Liquidation Authority for confirmation together with relevant explanation materials.
        Article 20 During the liquidation, the liquidation group may pay the wages, money of comforting the bereaved and social insurance fees of the employees in priority by the assets of liquidation under permission of the Liquidation Authority.
        Article 21 In case the situation in Article 34 of the Regulations appears, the liquidation costs shall be paid by the assets of liquidation before the liquidation group handing over the liquidation affairs to the people's court.
        Article 22 A liquidation scheme mentioned in Article 35 of the Regulations includes following contents:
        (1) the assets condition of the liquidated enterprise;
        (2) the creditor's rights and debts condition of the liquidated enterprise; and
        (3) the scheme of assets distribution.
        The scheme of assets distribution includes following contents:
        (1) the liquidation expenditures paid in priority according to Article 36 of the Regulations;
        (2) the payable wages, money of comforting the bereaved and social insurance fees of the employees;
        (3) the payable taxes;
        (4) the payable debts of the enterprise; and
        (5) the distributable residual assets.
        Article 23 The ruling of a court judgment or an arbitration award, if there is any, shall be prevail during the distribution of the residual assets by the liquidation group.
        Article 24 The liquidation report mentioned in Article 41 of the Regulations includes the following contents:
        (1) the name, the form, the legal representative ,the domicile, the time and capital of registration, the name and capital proportion of shareholder and so on of the liquidated enterprise;
        (2) the reason of liquidation;
        (3) the organization of the liquidation group;
        (4) any announcement of liquidation;
        (5) the assets situation of the liquidated enterprise;
        (6) the creditor's rights and debts situation of the liquidated enterprise; and
        (7) the handling result of the assets of the liquidated enterprise.
°°
        Article 25 The authority of the enterprise mentioned in these implementing rules refers to shareholders' meeting or shareholders' rally, or the board of directors in case there is no such meeting or rally, or the united management organization in case there is no such board.
        Article 26 These implementing rules shall take effect as of the date of promulgation.


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