If the business license of a Chinese enterprise is revoked, will the revocation affect the credit of the individual legal person?

2020/10/29

Difference between cancellation and revocation: The concept and consequences of cancellation: Cancellation means that the qualification of the subject of a Chinese enterprise meeting the legal conditions is extinguished after it applies to the original registration authority and goes through the prescribed liquidation procedures.
After the cancellation of Chinese enterprises, they will completely disappear, their legal personality will be terminated, all employees will be demobilized, all bank money will be recovered, and all creditors and debts will be terminated.
The concept and consequences of revocation: revocation refers to the compulsory suspension of business activities by Chinese enterprises due to their violation of laws, regulations or administrative provisions.
Revocation is the act of the saic to forcibly terminate the operating rights of Chinese enterprises.
Before the cancellation after the revocation, the company shall still exist, but shall not carry on business.

The revocation of the business license of a Chinese enterprise as a legal person is an administrative punishment imposed by the State Administration for Industry and Commerce on an illegal Chinese enterprise as a legal person in accordance with the state administrative regulations for industry and commerce.
After a Chinese enterprise as a legal person has its business license revoked, it shall go into liquidation in accordance with the law. After the liquidation procedure is completed and the industry and commerce cancellation registration is completed, such Chinese enterprise law personnel shall be eliminated.
If the Chinese enterprise does not cancel, the subject qualification of the company still exists, but the operation qualification has been cancelled. If the company does not intend to operate, the company should be cancelled in time.
If a Chinese company is unfortunately revoked of its business license, it will have to go through the normal company cancellation process.
Because the cancellation of registration is based on the application of Chinese enterprises, is the initiative of Chinese enterprises, and is the only way for Chinese enterprises to legally exit the market.


What will be the impact of Chinese enterprises being revoked and not cancelled?

1. If the company is not cancelled after the revocation, all the shareholders of the company or Chinese enterprise whose business license is revoked will not be qualified as legal persons or supervisors again within 3 years.

2. If the company is not cancelled after being revoked, the legal person and shareholders of the company will be included in the list of dishonest persons (blacklist), and the legal person will never be able to serve as the legal person again.
3. Taxes will be permanently monitored.
4. At present, the country is improving the personal credit system, which will be included in the future, such as affecting bank loans, going abroad, granting honorary titles, leaving the country and so on.

Reasons for revocation of business License:
Different types of revocation of business licenses may have different reasons for revocation.
In accordance with the "regulations on the administration of company registration revoked reason cited as the main line, combining with the sole proprietorship enterprise registration measures for the administration of China, the partnership enterprise registration measures for the administration of China, the Chinese enterprise legal person registration management regulations and related laws and regulations, such as reason to revoke the business license in China can be summarized as the following main aspects:
(1) False registration.
If a business license is obtained through false registration or fraud, and the circumstances are serious, the business license may be revoked.
(2) It shall not open or close its business without reason.
Article 225 of the Company Law and Article 62 of the Regulations on The Administration of Company Registration both stipulate that if a company fails to start business for more than 6 months after its establishment without justified reasons, or if it stops business for more than 6 consecutive months after its establishment, the company registration authority shall revoke its business license.
Except that this is not included in the Measures for the Administration of The Registration of Partnership Chinese Enterprises
(3) Do not apply for cancellation.
In other words, if a Chinese enterprise which has already gone bankrupt or dissolved and the liquidation has come to an end but fails to handle the cancellation of its registration, its business license may be revoked if such Chinese enterprise exists in name only.
Except that the Measures for the Administration of registration of Sole Proprietorship Chinese Enterprises do not provide for this purpose
(4) Evade annual inspection.
When a Chinese company fails to attend annual inspections for two years in a row, its business license can be revoked.
(5) Abuse of license.

License issued by the object is specific, license the content above is also specially be recorded after a particular look, and license itself, in principle, shall not be used as means of profit, any forge, alter, lease, lend, transfer the behavior of the business license, all substantial damage license issued by the order, and possible cause of the business license revoked.
This point, almost all Chinese enterprise registration administration regulations have been made.
(6) Illegal operation.
Specifically, it can be divided into two types: one is the operation beyond the scope of business, which is stipulated in the "Regulations on the Administration of Company Registration" and "Regulations on the Administration of the Registration of Legal Persons of Chinese Enterprises";
Secondly, the reasons for revoking the business license are those that violate all kinds of laws and regulations. There are different provisions in many laws and regulations, because the specific circumstances of illegal business are obviously different.
For example, Article 49-53 and Article 56 of The Product Quality Law of China stipulate 6 kinds of illegal business situations in which the business license can be revoked;
Article 51 of the Law of the People's Republic of China on the Protection of The Rights and Interests of Consumers also specifies nine situations in which a business license can be revoked.
In addition, the Environmental Protection Law, the Law against Unfair Competition, the Price Law and other laws contain specific provisions for revoking business licenses due to illegal operations.

Practice, some managers in their understanding of suspension and cancellation of the error, think the cancellation to the liquidation, the announcement to spend money, but also run the relevant units, as is the part of industry and commerce business license revoked the time, even the revocation of a few Chinese companies as a relief, some Chinese companies intentionally by adopting the method of not to attend the annual inspection, waiting for the part of the revocation of the business license for industry and commerce.
But actually, after revocation does not cancel, it is to exist huge legal risk.