How will assets be handled during the WFOE deregistration process?
Assets will generally either be liquidated, or transferred to the shareholders in WFOE deregistration process. A liquidation committee is formed to liquidate the assets.
The timing and method of asset disposal will largely depend on the type of assets and the situation of the company.
Early on in the WFOE deregistration process, a liquidation committee, consisting of all shareholders, will need to be formed.
Once formed, the liquidation committee will be responsible for preparation of the balance sheet and a detailed list of all assets, properties evaluation, and formulation and implementation of a company liquidation plan, including liquidation of assets. Assets include intellectual property.
The liquidation committee will also be responsible for a number of other matters concerning the WFOE deregistration process, including notifications to creditors and the preparation of the liquidation report to submit to authorities. Here, it should be noted that a company should refrain from paying back creditors, until the liquidation plan has been made and approved by the board of shareholders.
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