Breakdown of Businesses Taking on Re-Align Framework to Terminate Existing Rental Contracts ahead of Schedule
Ministry of LawSpeakers
Summary
This question concerns inquiries from Mr Chua Kheng Wee Louis regarding the Re-Align Framework’s impact on business rental contracts and affected property square footage. Minister K Shanmugam clarified that the framework facilitates contract renegotiation for small and micro businesses, with 114 electronic notices served by 26 January 2021. Affected businesses had until 26 February 2021 to submit notices, though the Ministry does not track hardcopy filings or the specific square footage of affected properties. Minister K Shanmugam noted that a four-week negotiation period is mandatory, with termination allowed only if parties fail to realign contracts with the post-COVID-19 environment. The policy encourages contracting parties to approach negotiations in a fair and reasonable manner, recognizing that the pandemic was an event that no one could have predicted.
Transcript
11 Mr Chua Kheng Wee Louis asked the Minister for Law (a) how many businesses have taken on the Re-Align Framework in order to terminate their existing rental contracts ahead of schedule; (b) what are the categories that these contracts fall under; and (c) within non-residential immovable property, what is the square footage of the property sub-sectors affected.
Mr K Shanmugam: The Re-Align Framework ("Framework") allows small and micro businesses that have been significantly impacted by COVID-19 to renegotiate selected types of contracts, so as to realign their contracts with the post-COVID-19 business environment. Renegotiation is the primary relief, not termination.
The Framework commenced on 15 January 2021, and affected businesses have until 26 February 2021 to submit a Notice of Negotiation ("NoN") to seek relief under the Framework.
As of 26 January 2021, a total of 114 NoNs have been served using the online electronic system. Affected businesses may also serve the NoNs in hardcopy on the other party or parties to the contract ("Other Party") . We are unable to track the number of hardcopy NoNs served.
As of 26 January 2021, the number of NoNs served using the online electronic system for each category of contract is as detailed in Table 1 below.
We do not track the square footage of the property sub-sectors covered by the Framework.
Under the Framework, the service of a NoN by an affected business on the Other Party triggers a 4-week negotiation period, during which parties are encouraged to understand each other’s position, and work towards a mutually acceptable outcome. The contract may be terminated only if there is no successful negotiation. We would like to encourage contracting parties to approach the negotiations in a fair and reasonable manner, and work towards a mutually acceptable outcome, bearing in mind that COVID-19 was an event that no one could have predicted.