Legal basis: People's Republic of China (PRC) Company Law.
Article 195 After clearing the company's assets, preparing the balance sheet and list of assets, the liquidation group shall formulate the liquidation plan and report it to the shareholders' meeting or the relevant competent authority for confirmation. If the company's property can pay off the company's debts, it shall pay the liquidation expenses, employee wages and labor insurance expenses respectively, pay the taxes owed and pay off the company's debts. After the company's property is paid off in accordance with the provisions of the preceding paragraph, the remaining property shall be distributed by the limited liability company in proportion to the shareholders' capital contribution and by the joint stock limited company in proportion to the shares held by the shareholders. During the liquidation period, the company shall not carry out new business activities. The company's property shall not be distributed to shareholders before it is paid off in accordance with the provisions of the second paragraph.
Article 196 After liquidation due to the dissolution of the company, the liquidation group shall immediately apply to the people's court for bankruptcy if it finds that the company's assets are insufficient to pay off its debts after clearing the company's assets and compiling the balance sheet and list of assets. After the company is declared bankrupt by the people's court, the liquidation group shall hand over the liquidation affairs to the people's court.
Article 197 After the liquidation of the company, the liquidation group shall prepare a liquidation report, submit it to the shareholders' meeting or relevant competent authorities for confirmation, and submit it to the company registration authority to apply for cancellation of company registration and announce the termination of the company. If the company fails to apply for cancellation of company registration within the time limit, the company registration authority shall revoke its business license and make an announcement.