Shanghai Aims to Streamline Business Deregistration Process

Shanghai is improving business deregistration procedures to enhance the ease of doing business in the city. The Opinions released by government bureaus aim to simplify the process, including reforming digital services and allowing companies to suspend operations without repercussions. These efforts align with national initiatives to support foreign and private investment starting in 2023.

Shanghai is seeking to simplify business deregistration procedures to facilitate market exit and improve the ease of doing business in the city. Initiatives include reforming the simplified deregistration procedures, improving digital deregistration services, and allowing companies to suspend operations without fear of reprisals. We explain the efforts to improve procedures for company deregistration in Shanghai.

The Shanghai Municipal Administration for Market Regulation (AMR), the Shanghai Municipal Tax Authority (AT), and other municipal government bureaus jointly released the Opinions on Comprehensively Deepening the Reform to Facilitate the Exit of Business Entities (“the Opinions”), which seek to facilitate business deregistration procedures for companies located in Shanghai.

The Opinions are the latest effort by Shanghai and other local governments to improve the business environment by reducing administrative burdens on companies. In 2023, the central government launched initiatives to improve the environment for both foreign and private investment in China. These initiatives included efforts to increase the ease of doing business, such as improving cross-border data transfer procedures, optimizing foreign investment services, and providing financial and resource support for private investors, among many others.

The Opinions will be in force from February 18, 2024, to February 17, 2029.

The Opinions propose five key measures to reform the business exit system, which we summarize below.

The Opinions call for enhancing the simplified deregistration procedures, a system by which eligible companies can choose a streamlined online mechanism for handling deregistration.

Simplified deregistration procedures were first introduced in 2017 to allow certain eligible companies to deregister quicker and more easily. The procedures are conducted through an online government service, meaning procedures do not need to be handled in person, require fewer documents, and omit the steps of establishing a liquidation committee or issuing a newspaper announcement, as required under general business deregistration procedures.

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