Foreigners in China Now Subject to SAFE Registration for Equity Incentive Plans

Foreigners in China Now Subject to SAFE Registration for Equity Incentive PlansChina’s State Administration of Foreign Exchange (SAFE) replaced the “Circular Regarding Procedural Requirements for Chinese Nationals to Participate in Employers’ Overseas Equity Incentive Plans (huizongfa [2007] No.78)” (“Circular 78”) with the new “Circular Regarding Issues Relating to Foreign Exchange Administration of Domestic Individuals’ Participation in Equity Incentive Plan of Overseas Listed Companies (huifa [2012] No.7)” (“Circular 7”) in February 2012.

The new Circular 7 introduces changes to both the application process and the compliance requirements. Some of the changes reduce the complexity of the application procedures, while others add to the ongoing compliance burdens. The most distinctive feature of the new Circular 7 is its extension of applicable entities and applicable persons for SAFE registration. Under Circular 7, foreigners working in China are subject to SAFE registration if they participate in any form of equity incentive plan with an overseas-listed company. However, it remains unclear as to whether Circular 7 applies to international assignees to China in the same way as it does to the locally-hired foreigners. Circular 7 is still subject to the individual interpretations of various local SAFE offices, so please check with the relevant authorities in your jurisdiction.

The table below offers a comparison of the scope of the SAFE registration of the Circular 78 and the Circular 7

Foreigners in China Now Subject to SAFE Registration for Equity Incentive Plans

For professional assistance in China contact Rosario Di Maggio at rosario.dimaggio@dezshira.com or visit www.dezshira.com

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China Briefing hosts a wealth of business intelligence on legal, tax, and operational issues in China from a practical perspective. Knowledge, expertise and commentary for China Briefing is regularly contributed by Dezan Shira & Associates´ professional legal and tax staff. Currently located in Futian district, Dezan Shira & Associates has been assisting foreign companies in Shenzhen for 22 years.

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