On February 15, 2012, the State Administration of Foreign
Exchange ("SAFE") issued the Notice on Relevant
Issues Concerning Foreign Exchange Control on Participation in
Equity Incentive Plans of Overseas Listed Companies by Domestic
Individuals (Notice), which took effect immediately and
superseded the Operating Rules for Foreign Exchange Control on
Participation in Employee Ownership Plans and Stock Option Schemes
of Overseas Listed Companies by Domestic Individuals issued in
2007, and the Notice on Delegating the Approval Authority on
Initial Foreign Exchange Purchase and Payment Quotas and Opening of
Foreign Currency Accounts Relating to Participation in Employee
Stock Ownership Plans of Overseas Listed Companies by Domestic
Individuals issued in 2008. Under the Notice, companies listed in
Hong Kong, Macao, Taiwan or foreign countries may grant their own
stocks to directors, supervisors, senior management personnel or
other employees of their domestically registered branches
(including representative offices), parent companies, subsidiaries,
partnerships or other institutions that directly or indirectly
control or are controlled by the listed companies as part of an
equity incentive plan. Individuals who participate in such equity
incentive plan shall, through the domestic companies they serve,
entrust a domestic agent and an overseas trustee to handle related
matters. The domestic agent shall be responsible for foreign
exchange registration and quota application, account opening, fund
transfer and foreign exchange settlement while the overseas trustee
shall be liable for the exercise of options, purchase and sale of
related stocks or equity, and fund transfers etc. We will provide a
detailed analysis of the Notice in our sister publication, Asia
in Focus. If you do not already receive Asia in Focus
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The full Chinese text of the Notice is available
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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