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SAFE welcomes participation of foreign employees in domestic equity incentive plans
By:Lu Yukun  |  From:english.eastday.com  |  2019-02-14 10:34

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.

According to the Measures, foreign employees who participate in the equity incentive plans offered by domestic listed companies are allowed to complete such bank transactions as cross-border payment/receipt, money transfer and remittance upon presentation of relevant registration certificates and documents, without prior administrative approval.

The materials required include a written application, a registration form and proof of the equity incentive plan, and a letter of commitment that endorses the employment relationship between a foreign employee and the employer. Local foreign exchange control bureaus will issue relevant registration certificates after reviewing and approving the above-mentioned materials.

A foreign employee can choose the source of money needed for participation in equity incentive plans. It can be her/his legal income in China or money transferred from abroad. If such an employee uses money from a domestic foreign currency account, he/she should convert his/her foreign currency capital into RMB and deposit the money into a relevant domestic RMB account.

Foreign employees can also sell their stocks or equities under an equity incentive plan or stock option plan and transfer the earnings or dividends abroad upon presentation of relevant certificates or required transaction proofs.

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.


 

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