Clifford Chance

SAFE issues new rules on share incentive plans offered by overseas listed companies

28 March 2012

The State Administration of Foreign Exchange has issued a new Circular (Circular 7) to clarify the extent of its supervision over the implementation of share incentive plans (SIPs) in China by overseas-listed companies.  Unlike prior regulations which were confined to regulating share option plans and employee share ownership plans, Circular 7 now applies to all kinds of SIPs permitted by law.  It also applies to employees who are non-PRC nationals having resided in China for more than a year on a continuous basis.  Fewer documents are now required to be filed by the domestic agent for foreign exchange registration in respect of SIP participation by the employees.  However, Circular 7 requires all changes and cancellations of foreign exchange registration for SIP participation to be made within a specific timeframe and also shortens the time frame for submitting a report on the status of SIP implementation.

Download PDF