According to a statement on the website of the State Administration of Foreign Exchange (“SAFE”) issued on February 12, the People’s Bank of China and SAFE has issued the Administrative Measures on the Management of Funds in connection with Foreign Employee Equity Incentive Plans of Domestic Listed Companies (hereafter the “Measures”). The Measures, which clarify how relevant funds should be managed, is a further move to welcome participation of foreign employees in equity incentive plans offered by domestic listed companies.
Restrictions on the participation of foreign employees in stock option plans offered by domestic listed companies have been gradually lifted in this decade. In 2006, the trial administrative measures on equity incentive plans offered by listed companies did not specifically permit foreign employees'participation. However, the officially implemented 2016 version of the administrative measures allows foreign members of BOD, senior management, executive officers and core technical talents to be eligible for equity incentive plans. Such foreign employees are also allowed to open a securities account in China, which, however, can only be used to hold or sell the stocks or equities granted to them.
In August 2018, the China Securities Regulatory Commission further revised the administrative measures to expand the coverage of equity incentive plans to all foreign employees of domestic listed companies, including those working overseas.