SAFE Registration: Chinese Individuals Participating in SIP of Overseas Listed Companies
In order to attract and retain talents, an increasing number of multinational enterprises have implemented Share Incentive Plans (“SIP”). Due to China's foreign exchange control policies, employees in China participating in share incentive plans of overseas listed companies need to go through foreign exchange registration procedures with the State Administration of Foreign Exchange (“SAFE”). This article, in combination with the prevailing policies and regulations, has sorted out the relevant foreign exchange registration and compliance key points for clients’ reference.
Initial Registration
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Applicable parties
Overseas listed companies: Enterprises listed on stock exchanges outside China (including Hong Kong, Macao and Taiwan)
Chinese individuals: Directors, supervisors, senior executives and other employees who hold positions or are employed by the China subsidiaries of overseas listed companies or China companies that have a controlling or actual control relationship with overseas listed companies.
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Which party is eligible to handle the registration?
It will be handled by the China domestic agency, usually the China subsidiary of the overseas listed company. Alternatively, it can be entrusted to other China companies that have asset custody business as the agency. (This article has assumed that the registration will be handled by the China subsidiary of the overseas listed company.)
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If the oversea listed company has multiple subsidiaries in China, do they need to register separately for each one?
No, it is sufficient to select one China subsidiary to serve as the agent to handle the registration.
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When should the China subsidiary proceed with the initial registration?
The initial registration must be applied within three months after the commencement of the share incentive plan.
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Main documents to be submitted
(1)
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Written application;
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(2)
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Registration Form for Chinese Individuals Participating in the Share Incentive Plan of Overseas Listed Companies
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(3)
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Proof materials for the authenticity of the share incentive plan
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(4)
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Power of Attorney
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(5)
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Business License of the China subsidiaries participating in the share incentive plan
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(6)
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Commitment letter confirming the authenticity of the employment or labor relationship between the individual and the China company
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Time Frame
It takes approximately 20 working days for SAFE to approve the registration.
Ongoing compliance requirements
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Quarterly Reporting
The China domestic subsidiary is required to submit quarterly reports which are due within three working days of the close of the quarter.
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Change Registration
When there are significant changes to the share incentive plan, or when the purchase and payment of foreign exchange quotas need to be increased, or when the domestic agency or the overseas trustee institution changes, the China domestic subsidiary shall apply for the change registration within three months from the date of the change.
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Cancellation of Registration
When the share incentive plan is terminated due to the expiration of the plan, the delisting of the overseas listed company, or the merger and reorganization of the China domestic subsidiaries, the China domestic subsidiary shall, within 20 working days after the termination of the equity incentive plan, apply to the local office of SAFE for the cancellation registration.
KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advice and services in respect of the formation and registration of company, application for various business licenses and permits, any compliance, tax planning, audit, and accounting in China. Please call and talk to our professional consultants for details.
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