China Eases Rules for Expat Stock Incentive Programmes

New rules from SAFE will allow foreign employees of China-listed companies to invest domestically using funds remitted into the country from overseas.

China’s SAFE (the State Administration of Foreign Exchange) has announced new rules on how foreign employees of domestically-listed firms can handle relevant cross-border transactions if they take part in stock incentive programmes.

The CSRC (China Securities Regulatory Commission) first allowed foreign nationals working in China to participate in equity incentives from domestically-listed firms in 2016. The initiative was extended in August 2018 to those working for Chinese companies in overseas locations.

> ALSO READ: Chinese Brokers Receive Lukewarm Response from Expat Investors (18 Sep 2018)

The latest move is part of the government’s efforts to steadily open the domestic capital market and support the implementation of equity-based incentive policies for foreign employees of locally listed firms, according to a Global Times report.

Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, said in the report that the new guidelines will be attractive to foreign employees of Chinese companies and will encourage foreigners to participate in the construction of China’s capital market.

Under the new rules, locally listed companies and their foreign employees can now directly handle relevant cross-border income and expenditure transactions, capital transfers, and foreign exchange settlements without prior approval from SAFE, if they obtain a business registration certificate for participation in equity incentives programmes.

The new rules also allow the foreign employees to use funds not only from legitimate domestic income, but also funds remitted into China from overseas, to participate in equity incentives programmes.

This could potentially make transferring capital in and out of China easier.

To Top