Rent Reduction and Exemption Policy
On May 29, 2022, The Action Plan of Shanghai Municipality for Accelerating Economic Recovery and Revitalization is enacted for the purpose of implementing a package of policies and measures of the State Council on economic stabilization, effectively coordinating pandemic prevention and control and economic and social development and promoting accelerated economic recovery and revitalization in a vigorous and orderly manner.
Exempting small and micro enterprises and individually owned businesses renting state-owned premises for production and operation activities from submitting materials proving they are affected by the epidemic and exempting them from paying rent for six months in 2022. Private non-enterprise entities leasing state-owned premises and having difficulties in operation shall be exempted from six months’ rents in 2022 by reference to the provisions on small and micro enterprises and individually owned businesses.
We recommend that small and micro enterprises and individually owned businesses that rent state-owned premises follow the following three steps to apply for rent waiver during the epidemic: “qualification examination”, “submit an application for rent reduction or exemption”, and “acceptance and approval”.
Step 1: Qualification Examination (Review the eligibility of lessor and lessee)
First, check if the lessor is an state-owned enterprise (“SOE”). Second, check if the lessee is qualified for “small and micro enterprises and individually owned businesses engaged in production and operation activities that ultimately signed the lease.”
Step 2: Submit an application for rent reduction or exemption
According to the “Implementation Rules”, SOEs shall notify the lessees within the scope of each policy through announcements, telephone calls, and the Internet, so as to make sure lessees know what they need to know.
The lessee should prepare and submit application documents required for rent reduction or exemption, generally including the following:
1) Application form for rent reduction or exemption of state-owned premises;
2) A copy of the three-in-one business license;
3) Enterprise shareholder structure chart;
4) Lease contract, sublease contract (if applicable);
5) Small and micro enterprise certification materials;
6) Other necessary materials required by the lessor.
Step 3: Acceptance and Approval
If the application is not approved, for the lessee that does not qualify for rent reduction and exemption, the state-owned lessor should also notify it in a timely manner after the disapproval. Under this circumstance, we recommend that the lessee to hire a lawyer to negotiate and communicate with the other parties. If the result is still unsatisfied, the lessor can prepare required documents and file a lawsuit to the people’s court where the leased property is located.
Zhengyang Wang Senior Partner
Address: 40 Floor, Tower 1, Lujiazui Century Financial Plaza, No. 729 South Yanggao Road, Pudong New Area, Shanghai 200127, P.R.China