China’s SAMR Introduces New Rules for Forcible Company Deregistration

On September 10, 2025, China's State Administration for Market Regulation (SAMR) officially promulgated the "Measures for the Implementation of the Forcible Deregistration of Company System" (hereinafter referred to as the "Measures"), set to take effect on October 10, 2025. These Measures operationalize the forcible deregistration system introduced in the newly revised Company Law (2023), representing a critical step forward in optimizing China's business environment, clearing "zombie enterprises," and enhancing the overall quality of market entities.

Core Objective: Unclogging Exit Channels and Purifying the Market

The core purpose of the Measures is to establish an efficient, standardized, and fair compulsory exit procedure for companies that have had their business licenses revoked, been ordered to close, or been repealed, and have failed to apply for deregistration themselves within three years. This move effectively addresses the issue of numerous "zombie enterprises" hoarding scarce resources like company names and business licenses, thereby reducing market transaction costs and risks, and maintaining a healthy and stable company registration order.

Procedural Highlights: Balancing Efficiency with Rights Protection

The Measures detail the forcible deregistration procedure, emphasizing both efficiency and the protection of stakeholders' rights:

• Batch Announcement & 90-Day Period: The registration authority will use batch announcements to notify companies subject to forcible deregistration, with a lengthy 90-day announcement period to allow sufficient time for response.

• Objection Termination Procedure: If relevant authorities, creditors, or any interested parties raise an objection that passes a formal review, the forcible deregistration process will be immediately terminated, preventing incorrect deregistrations.

• Flexible Service Methods: Explicitly allowing for service by public announcement for "missing" companies that cannot be contacted through their registered address solves a practical challenge.

• Three-Year Recovery Window: Interested parties can apply for restoration of registration within three years of forcible deregistration on legitimate grounds such as ongoing litigation or involvement in a case, providing a crucial recourse channel.

Implications for Businesses and Investors

For currently operational businesses, the Measures signal a healthier and more competitive market environment. For investors and creditors, the policy reduces the potential risks associated with the opacity of "zombie enterprises."

• Enhanced Compliance Importance: Companies must ensure the authenticity and validity of their registered information (especially domicile and business premises) and maintain open communication channels with regulators.

• Scrutinize Investment Targets: Investors should conduct more thorough due diligence by checking the status of target companies via the National Enterprise Credit Information Publicity System, being wary of those with revoked licenses or abnormal operation listings.

• Assert Rights Promptly: Creditors who identify a debtor at risk of forcible deregistration should file an objection during the announcement period to protect their claims.

Kingbridge Advisory's Perspective

The introduction of the "Measures for the Implementation of the Forcible Deregistration of Company System" is a significant step in China's efforts to modernize corporate governance and market regulation. It demonstrates the regulator's commitment, within the broader "delegate, regulate, and serve" reform, to not only facilitate market entry but also to streamline market exit, building a well-ordered market ecosystem.

Kingbridge Advisory recommends all businesses operating in China and their investors closely monitor this new regulation, promptly assess its potential impact, and ensure their operational compliance. Our expert team is available to provide professional advice and services regarding corporate compliance, deregistration procedures, and risk management.