Sunnyvale, CA -- (SBWIRE) -- 04/04/2012 -- Chinese authorities have released an updated guidance on the registration process for share plans with the State Administration of Foreign Exchange (SAFE), broadening the scope to cover most types of share plans.
Circular 7 replaces Circular 78 (issued on April 2007) and contains the following:
Changes to scope on initial SAFE registration
As per the new guidance, the registration requirement has been extended to cover a majority of plans offered including share options, stock purchase plans, restricted stock units, restricted shares, performance shares, etc.
Plans involving awards to non-employees belonging to a certain category, such as board directors or independent contractors can now be included in SAFE.
Share plans can also be extended to employees of representative offices.
Coverage has been extended to non-PRC nationals in order to standardize the administration procedure for both, PRC and non-PRC nationals.
Documents needed for initial SAFE registration
The new application process calls for lesser number of documents particularly removing the need for broker agreements. The application docket will include the following items:
- An application letter
- Standard registration form
- Proof of overseas listing
- An employment letter and certain other administrative documents
SAFE Reporting Standards
The administration of the new guidelines will be scrutinized closely. Quarterly reporting deadlines have been established which reduces the deadline from 10 working days to three working days after the end of a quarter.
Major revisions to registered SAFE plans will require supplementary registration generally within three months. In case of a merger and acquisition or expiration of plans, a deregistration process needs to be implemented.
The requirement of obtaining local SAFE approval when foreign currency is converted to RMB on the net proceeds derived from stock transactions by a company has been abolished. This will be taken care of by the concerned banks.
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