The Shanghai A foreign company is a wholly foreign-owned enterprise which has engaged in information-tech services for more than 10 years. From 2020, although it under the influence of downside risks to the global economy, the orders have still been stable. The cash flow has appeared serious problems yet, the company could not pay the salaries so all the staff has joined a class-action resignation. In despair the company has had to conduct liquidation and authorized a third party to finish canceling all procedures as soon as possible.

Unexpectedly, after the A foreign company has canceled in one month, the original Legal Representative of company has received a notice from Shanghai local finance ministry. A special finance subsidy of nearly 1.5(million) during the pandemic has been approved, allowing the foreign enterprise to provide bank account numbers to collect payments.

With this financial subsidy of nearly 1.5(million), the foreign company may be able to come back to life. The original legal representative of the A foreign company has communicated immediately with the original manager who had submitted an application for financial subsidies 3 months before the cancellation of the A foreign company, but the application system of the financial department at that time has only showed that it has been pending approval. Due to the arrears of wages of the company, the former financial manager has left after handing over the basic bookkeeping and tax filing work. However the third-party professional service organization providing the cancellation service has not investigate whether the company has applied for financial subsidies, and cancelled the enterprise as quickly as possible in accordance with the requirements of the headquarters.

Although it has done repeated communication and coordination, the company has cancelled business license and bank account at this time and couldn’t gather money.

Dongjin Remind:

Due to there has huge uncertain factors in applying financial subsidies, there are financial subsides that can be applied for each year, as well as special financial subsides from time to time. Besides, it may need 6-12 month period from applying to receive the subsidy funds. (If there is little local financial funds, it may spend more times.) Many foreign enterprises can be negligent when they log out, as a result of losing deserved finance subsidy funds.

Dongjin notices before related enterprises decide to cancel, they should check clearly about records of applied finance subsides and progresses.

If you have any problems, consult about Dongjin at any time.

Mike Chang

Partner

mikechang@shanghaiinvest.com