Market entities experiencing hardship can apply to discontinue their business. One company in Shaoguan city has applied for business discontinuation.

The regulation on the registration management of market entities went into effect on March 1, 2022.

One of the highlights in the regulation is that it firstly establishes guidelines and requirements on the

discontinuation of business for market entities.

 

Let's take a look at the following example to see how to apply for discontinuation of business and the benefits market entities can have from this new policy.

 

Recently, the high-tech zone office of Shaoguan Administration for Market Regulation carried out registration formalities of discontinuation of business for a company registered in the high-tech zone. This is the first case Shaoguan city handled since the implementation of the policy on the discontinuation of business for market entities.

 

The company which applied for the business discontinuation has been experiencing hardship due to the epidemic and planed to suspend its business.Before the introduction of the new policy, market entities which stopped operating for a long time should face the risk of being included in the List of Enterprises with Serious Illegal and Dishonest Acts and the List of Enterprises with Abnormal Operations, or even being revoked of their business licenses.After consulting the staff of the high-tech zone office, the company learned that the new regulation has been put into effect and application can be done just by filling two application forms.With the help of the staff, the company successfully completed the business discontinuation registration formalities, becoming the first market entity in Shaoguan to successfully apply for the discontinuation of business.

 

After learning about this, you may be wondering how to go through the registration formalities of discontinuation of business.

 

According to Article 30 of the Regulation, if market entities are having difficulties which are caused by natural disasters, accidents, public health events, public security incidents etc., market entities can choose to discontinue their businesses in a certain period of time.Except as otherwise stipulated by laws and administrative rules.The period of business discontinuation shall not exceed 3 years. Once a market entity carries out business activities during the period of business discontinuation, it shall be deemed to have resumed business, and the market entity shall declare its business recovery to the public in the state enterprise credit information publicity system.

 

By finishing registration formalities of discontinuation of business, market entity can continue to keep the enterprise name, trademark, patent, etc., while it can also use legal instruments mailing address instead of address of residence or main business premises, so that it will not be listed in the abnormal operation business directory because of being not available to be reached, so to maintain a good credit record. Discontinuation of business has created a buffer zone for the market entities that have difficulties, reducing the costs of keeping their enterprises.

 

It is understood that the implementation of the policy on the discontinuation of business is to meet the need of enterprises which temporarily get into short-term business difficulties, but still want to retain their business. Before, the only choice for these enterprises is to go through the formalities for nullification of registration. The new policy is one of the measures to further deepen reforms to streamline administration and delegate power, improve regulation and upgrade services to create a better business environment.

 

You may still have questions about under what circumstances can market entity register for discontinuation of business, how long can that be and what you need to do to resume business. Let’s take a look at the tips as follows.

 

 

Market entities which are having difficulties caused by natural disasters, accidents, public health events, public security incidents etc., can choose to discontinue their businesses in a certain period of time.Except as otherwise stipulated by laws and administrative rules.

 

Before applying for discontinuation of business, market entity needs negotiate with the employees and settle matters of labor relations according to law.

 

Market entity should finish registration formalities of discontinuation of business with the registration authority before closing its business.The registration authority shall publicize the information of the enterprise and the address for delivery of legal instruments on the national enterprise credit information publicity system.

Note: Business annual report should still be published on time during the business discontinuation period.

 

Market entity that needs to apply for discontinuation of business should submit two forms to the registration authority, the "Application Form for Discontinuation of Business" and "Letter of Commitment".

 

After finishing registration formalities for discontinuation of business, the market entity’s duration of discontinuation and the address for delivery of legal instruments will be published on the national enterprise credit information publicity system to receive supervision from the public.

 

Once market entity wants to resume its business during the period of business discontinuation, it needs to terminate its published information on the national enterprise credit information publicity system, or it may be penalized with up to 30000RMB according to article 42 of the The regulation on the registration management of market entities.

Reminder：

 

The following circumstances will be taken as resumption of business:

1. Market entities that carry out business activities during the discontinuation period.

2. The expiration of the approved business discontinuation time limit.

3. Being in business discontinuation for over 3 years.

 

As for market entity which would need to extend the time limit of business discontinuation, that shall be handled within 30 days before the deadline of the current business discontinuation registration (the maximum time limit shall not exceed 3 years).

 

As for market entity which would not retain its business after business discontinuation registration, formalities for the nullification of registration should be completed.