Absorption merger refers to the merger of two or more enterprises into one enterprise and the absorbed company is dissolved. The creditor's rights and debts of the merging parties shall be inherited by the surviving company or the newly established company after the merger. After the merger, the merged enterprise obtains the assets and liabilities of one or more other enterprises by paying cash, issuing stocks or other consideration, and continues to retain its legal person status, while the other one or more enterprises lose their independent legal person status after the merger.

legal ground

Article 172nd of the Company Law of People's Republic of China (PRC)

Company merger can adopt absorption merger or new merger.

A company absorbs other companies for merger, and the absorbed company is dissolved. The merger of two or more companies to form a new company is a new merger, and the parties to the merger are dissolved.

Article 174

When a company is merged, the creditor's rights and debts of the merging parties shall be inherited by the surviving company or the newly established company after the merger.