Reed Smith Client Alerts

Shanghai Municipal Development and Reform Commission, Municipal Finance Bureau, Municipal Economic Information Technology Commission and Municipal Science and Technology Commission have recently agreed on the Shanghai Innovative Enterprise Headquarters Recognition and Reward Management Measures (《上海市创新型企业总部认定和奖励管理办法》, the Measures), which will come into effect on 1 March 2023 and remain valid until 29 February 2028. The Measures set out the recognition criteria, incentives, services and facilitation measures can be enjoyed by innovative enterprise headquarters in Shanghai.

In addition, on 9 November 2022, the Shanghai Municipal People’s Government issued the Provisions on Encouraging Multinational Corporations to Set Up Regional Headquarters (《上海市鼓励跨国公司设立地区总部的规定》,the Provisions), aimed at encouraging multinational companies to establish headquarter enterprises in Shanghai, raising the level of headquarter-related economic activity and further opening up Shanghai to foreign investment.

This article summarises the core requirements under the Measures and analyses the associated subsidies and benefits.

What are the key requirements?

Generally speaking, to be officially recognised as having an innovative enterprise headquarters, an enterprise must meet requirements covering four criteria: innovation, growth potential, contribution, and function. The key requirements are as follows:

(i) An applicant must be a Shanghai-registered enterprise in the industrial or services sector with total assets of at least RMB 200 million or a market value of no less than RMB 2 billion; have annual sales revenue of more than RMB 100 million or its average compound growth rate of sales revenue in the last three years must exceed 20%; have headquarters in Shanghai that perform a wide range of functions, including research and development, sales, and financial operations; and have two or more branches located outside the city.

(ii) The scope of industries in which the company runs its main business or offers its main products or services must cover the key areas set out in the national “Guidance Catalogue of Key Products and Services for Strategic Emerging Industries” and related plans, as well as the core industries defined in the “Statistical Classification of Digital Economy and its Core Industries (2021)”.