Article 232 of the revised Company Law in 2023, hereinafter referred to as the new Company Law, stipulates that directors are the liquidation obligor of the company. This provision is consistent with Article 70 of the Civil Code, which states that "members of the executive or decision-making bodies of a legal person, such as directors or directors, shall be liable for liquidation". What are the specific obligations of the liquidation obligor involved? What is the legal responsibility of the liquidation obligor for failing to fulfill their obligations? What is the difference between a liquidation obligor and a liquidation team?

What is a liquidation obligor?

The so-called liquidation obligor refers to a civil entity that, based on its specific legal relationship with the company, has the obligation to organize the liquidation of the company in accordance with the law when it is dissolved, and assumes corresponding liability in accordance with the law when the company fails to liquidate in a timely manner and causes damage to relevant rights holders.

What are the obligations of the liquidation obligor?

There is no clear provision in the new Company Law regarding the obligations of the liquidation obligor. According to previous regulations, the liquidation obligations of the liquidation obligor mainly include the following two types: one is to establish a liquidation team within the statutory deadline to begin liquidation; The second is to clean up the company's main assets and properly keep the company's accounting books and important documents. But the obligation of the liquidation obligor is not limited to this. In addition to initiating the liquidation procedure in accordance with the law, the liquidation obligor also has the obligation to ensure the smooth progress of the entire liquidation procedure.

What is the legal responsibility of the liquidation obligor for failing to fulfill their obligations?

According to the provisions of the "Provisions of the Supreme People's Court on Several Issues Concerning the Company Law (II)" (Interpretation [2020] No. 18), the civil liability caused by the failure of the liquidation obligor to fulfill the liquidation obligation can be roughly divided into three types: liquidation liability, liquidation compensation liability, and liquidation liability. (1) Liquidation responsibility refers to the obligation of the liquidation obligor to fulfill the liquidation obligation forcibly due to failure to organize liquidation in accordance with the law. (2) Liquidation compensation liability refers to the negative behavior of the liquidation obligor who delays the performance of organizational liquidation under the conditions of fulfilling liquidation obligations, resulting in a reduction of the company's assets and indirectly infringing on the interests of the company's creditors, and should bear compensation liability within the scope of the creditors' losses. (3) Liquidation liability refers to the joint and several liability for the company's debts if the liquidation obligor fails to fulfill their obligations, resulting in the loss of the company's main assets, accounting books, important documents, etc., making liquidation impossible.

What is the difference between a liquidation obligor and a liquidation team?

(1) The scope and generation methods of the subject are different. The director is the sole liquidation obligor of the company as stipulated by law. The members of the liquidation team can be designated by the company's articles of association or shareholders, and directors, senior management personnel, and professional institutions hired by the company can all become members of the liquidation team.

(2) The obligations are different. The obligations of the liquidation obligor mainly include initiating liquidation procedures, organizing liquidation, and forming liquidation teams. The main obligation of the liquidation team is to carry out specific liquidation affairs of the company, such as clearing the company's assets, preparing balance sheets and property lists, notifying and announcing creditors, handling outstanding business, paying taxes, clearing creditor's rights and debts, disposing of remaining assets, and representing the company in civil litigation activities.

(3) The nature and legal qualifications of the obligations undertaken are different. The obligation of the liquidation obligor is statutory and does not have the status of a litigation subject. The obligations of the liquidation team are based on the appointment or designation of the company or court, and have an agreed or designated nature. The liquidation team has the status of a litigation subject when carrying out liquidation affairs and can represent the company in relevant legal activities.

In summary, the new Company Law stipulates that directors are the sole liquidation obligor, and their obligations should run through the entire liquidation process. In the context of the shift from shareholder centeredness to board centeredness, the responsibilities of directors are more significant than before. Directors should diligently fulfill their statutory duties and avoid assuming corresponding compensation responsibilities.