Meaning
Corporate liquidation procedures in China culminate in the formal deregistration of enterprise bank accounts and the distribution of remaining capital. The capital account closing sequence describes the step-by-step regulatory workflow that foreign invested enterprises must follow to close their capital accounts and repatriate leftover equity. This sequence ensures all domestic liabilities and taxes are settled before the final exit of foreign capital.
Liquidation Audit
A mandatory audit by a licensed accounting firm must precede any bank account closures. As part of the capital account closing sequence, the liquidation committee must compile a detailed tax report and pay all outstanding corporate and individual income taxes. The tax bureau then issues a final tax clearance certificate which is necessary for bank processing.
Account Termination
The formal application is presented to the deposit bank where the capital account is held. Executing the capital account closing sequence requires the submission of the tax clearance certificate, the liquidation report, and the government approval of deregulation from the market regulator. The bank will verify these documents with the foreign exchange database before initiating the closure.
This step cancels the foreign exchange registration numbers associated with the enterprise and prevents any subsequent capital injections.
Fund Transfer
The final remittance of remaining assets occurs once the account is closed. The capital account closing sequence ends with the conversion of Renminbi into foreign currency and its transfer to the overseas parent. Once completed, the capital account is permanently deactivated and cannot receive or send further payments.
