Structuring Foreign Capital Accounts under Chinese Foreign Exchange Regulations
Structure foreign exchange capital accounts by selecting between macro-prudential debt and ratio models before bank registration to secure seamless liquidity.
Liquidation Settlement Account
Meaning
Temporary corporate bank account established to hold assets during the formal dissolution and wind-down phase of a business enterprise. The liquidation settlement account manages the orderly distribution of remaining cash to creditors, employees and shareholders.
Cash Distribution
All existing bank balances from operational accounts are consolidated into this single controlled vault after the liquidation committee is registered. The liquidation settlement account remains active while the tax clearance and social security obligations are calculated and paid off. It functions as the reservoir for the proceeds from asset auctions or stock liquidation until the final disbursements are authorized.
Closing Sequence
Payments follow a strict statutory order where salary and labor compensation must be cleared before any investor payout is possible. Banks oversight the liquidation settlement account to prevent unauthorized transfers that bypass the verified creditor list. This structure ensures that no assets are stripped from the entity while there are still outstanding liabilities with the local tax bureau.
Liability Order
Funds remaining after all senior claims are met can be converted to foreign exchange for repatriation if the investor has cleared its customs and currency records. The liquidation settlement account is permanently closed once the committee issues its final report and the SAMR cancels the business permit. This action signals the definitive legal death of the corporation within the financial system.