When checking the status of a Chinese company, foreign investors may come across two very different terms:
“Business License Revoked” (吊销营业执照) and “Deregistered” (注销).
They may look similar because both usually mean that the company is no longer operating normally. Legally, however, they are quite different.
1. Revocation Is a Penalty — Not the End of the Company
A revocation of a business license is generally an administrative measure imposed by the market regulation authority because the company has seriously violated applicable laws or regulations.
For example, under Chinese market registration rules and the Company Law, a business license may be revoked in certain circumstances involving serious registration violations, prolonged non-operation, or other unlawful conduct.
The most important point is: a company does not automatically cease to exist simply because its business license has been revoked.
Under the PRC Company Law, revocation of a business license constitutes a statutory ground for dissolution. The company must then enter into liquidation.
During the liquidation period, the company legally continues to exist, but it may not conduct business activities unrelated to liquidation. Its assets, debts, taxes and outstanding obligations still need to be dealt with.
In other words: Revoked ≠ legally dead.
The company has lost its qualification to conduct normal business, but it has not yet completed its legal exit.
2. Deregistration Means the Company Legally Ceases to Exist
Deregistration, on the other hand, is the formal procedure through which a company exits the market.
Normally, after a company is dissolved, it must complete liquidation, settle its debts, deal with taxes and employee-related matters, prepare a liquidation report, and then apply to the registration authority for deregistration.
Chinese market registration rules expressly provide that a market entity terminates once its deregistration is approved by the registration authority.
The PRC Company Law likewise requires the liquidation group, after completion of liquidation, to submit the liquidation report and apply for deregistration of the company. Therefore: Deregistration means the legal end of the company.
Once deregistration has been properly completed, the company no longer exists as a legal person, subject of course to circumstances where shareholders or other responsible persons may remain liable for pre-deregistration obligations.
3. What Happens After a Business License Is Revoked?
This is where many companies make a mistake.
Some shareholders assume: “The license has already been revoked, so we can simply leave the company alone.”
That is not correct.
Under the current PRC Company Law, if a company is dissolved because its business license has been revoked, its directors are generally the persons responsible for liquidation, and a liquidation group should be formed within 15 days after the dissolution event occurs. Failure to perform liquidation duties in a timely manner may result in liability for losses caused to the company or its creditors.
In addition, a company whose business license has been revoked generally cannot use the simplified deregistration procedure. It normally has to deal with liquidation and outstanding liabilities before completing deregistration.
4. A New Rule: Long-Term “Revoked but Not Deregistered” Companies May Be Forcibly Deregistered
China has also introduced a mechanism to deal with companies that remain in a “revoked but not deregistered” status for years.
Under the current Company Law and the Measures for the Implementation of Compulsory Company Deregistration, effective from October 10, 2025, where a company has been subject to revocation of its business license, ordered to close, or had its registration revoked, and has failed to apply for deregistration for three years, the registration authority may initiate compulsory deregistration procedures.
However, compulsory deregistration does not erase liability. The rules expressly provide that after compulsory deregistration, the liabilities of the company's former shareholders and persons responsible for liquidation are not affected.
So simply waiting for the company to disappear from the registry is not a way to eliminate its debts or the potential liabilities of responsible persons.
5. The Difference in One Table
|
Issue |
Business License Revoked |
Company Deregistered |
|
Chinese term |
吊销营业执照 |
注销登记 |
|
Nature |
Administrative sanction / regulatory action |
Formal market-exit procedure |
|
Can the company continue normal business? |
No |
No |
|
Does the company still legally exist? |
Yes, generally for liquidation purposes |
No, once deregistration is completed |
|
Must debts and taxes still be dealt with? |
Yes |
They should normally have been dealt with before deregistration |
|
Is liquidation normally required? |
Yes |
Usually completed before deregistration |
|
Is this the final legal termination of the company? |
No |
Yes |
6. Why Does This Matter in Practice?
This distinction is particularly important in commercial transactions, litigation and due diligence.
If the National Enterprise Credit Information Publicity System shows that a Chinese company is “吊销” (business license revoked), you should not automatically treat the company as having disappeared.
It may still: have outstanding debts, own assets, have creditors or debtors, be involved in liquidation, litigation or enforcement proceedings; and have directors, shareholders or other responsible persons facing potential liability.
By contrast, “注销” (deregistered) generally indicates that the company's legal existence has formally ended after completion of the applicable exit procedure.
A Simple Way to Remember: Revocation is a punishment while deregistration is an exit.
A revoked company is usually a company that should be liquidated and deregistered.
A deregistered company is a company that has completed its legal exit from the market.
For foreign investors dealing with Chinese companies, checking whether a counterparty is active, revoked, under liquidation, or deregistered can make a significant difference when assessing contractual risk, recovering debts, or deciding whom to sue.
By David Gao, an international lawyer in Beijing, China.
