[Q&A] Simplified Company Deregistration: Key Conditions & Risks
2025. 5. 9
Question: What are the applicable conditions, and pros and cons, of simplified enterprise deregistration?
Answer: With the implementation of the Enterprise Deregistration Guidelines (2023 Revision) and the Company Law (2023 Revision), the system for simplified enterprise deregistration has been further clarified. The applicable conditions and pros and cons are summarised as follows:
1. Applicable Conditions for Simplified Enterprise Deregistration
(1) Applicable Enterprises
Simplified enterprise deregistration applies to enterprises that have no outstanding liabilities or have settled all liabilities, including unpaid fees, employee salaries, social insurance expenses, statutory compensation, and due taxes. Listed companies are excluded from this process.
However, enterprises are not applicable for simplified enterprise deregistration in any of the following circumstances:
- If the deregistration requires approval,
- If the business licence has been revoked,
- If the company is listed in the abnormal business directory or the list of serious violations of trust,
- If its equity is frozen or pledged,
- If it holds equity or debt-related investments,
- If the enterprise has not completed income tax liquidation,
- If it is involved in legal proceedings or arbitration,
- If there are pending administrative penalties.
(2) Commitment by All Investors
When applying for simplified enterprise deregistration, all investors must commit that the enterprise has no unresolved creditor-debtor relationships.
(3) Public Announcement Requirement
The enterprise must publish a deregistration announcement on the Enterprise Deregistration Online Service Platform or the National Enterprise Credit Information Publicity System, including information about its intent to apply for simplified enterprise deregistration and the commitment made by all investors.
(4) Completion of Public Announcement Period Without Objection
- The announcement must be publicly available for 20 days on the National Enterprise Credit Information Publicity System. During this period, creditors, stakeholders, or relevant authorities may raise objections. The tax authorities will also verify whether there are any outstanding tax liabilities or social insurance issues.
- If no objections are raised within the 20-day period, the deregistration process can be completed within the following 20 days (subject to extension by the registration authority, but the total timeframe cannot exceed 50 days from the end of the public announcement period).
2. Pros and Cons
Pros:
Enterprises apply for simplified enterprise deregistration can bypass several complex steps required in standard deregistration procedures, including:
- Formation of a shareholder resolution to set up the liquidation team and start the liquidation,
- Creditor notification, liquidation process, and execution of a creditor-debtor clearing plan,
- Preparation of liquidation reports,
- Completion of tax deregistration.
to reduce the burden of lengthy self-liquidation procedures and streamlines administrative formalities
Cons:
All investors (shareholders) must explicitly commit that the company has no outstanding liabilities. If this commitment proves inaccurate, they bear joint liability for debts incurred before deregistration. In such cases, shareholders lose their limited liability protection, effectively increasing their financial risk.
Therefore, if the enterprise has a complex equity structure, unresolved financial issues, or foreign investors who may lack full knowledge of the enterprise’s operational and financial records, opting for the standard liquidation procedure is advisable.