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China SAFE

Exploring SAFE filing requirements, application processes, employee concerns, and practical implementation considerations for equity programs in China under Circular 7. Stay compliant and informed with key insights and expert guidance.

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China SAFE

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Presentation Transcript

  1. China SAFE The more things change…

  2. … the more they stay the same? • Introductions • Background • Registration of equity programs required before offers can be made • Repatriation requirement and responsibility for enforcement • Approval certificate and special-purpose foreign exchange account(s) • Circular 7 streamlining… not so much?

  3. Deciding to file • Employee demand / retention concerns • Cost analysis of filing and ongoing resources • Alternatives without SAFE filing • And where to file?

  4. Preparing the application under Circular 7 • Application letter and new registration form • Some standardization/simplification of supporting documents and “proof” of plans, e.g., SEC forms and EDGAR screenshots • Undertaking letter, eligible employees, and non-PRC nationals? • Local entity information • Review planned implementation with broker/stock plan administrator

  5. Increased SAFE scrutiny? • Looking back at past grants, past plans, past approvals • Fund flow conversion (or not) • Tax withholding procedures • Treatment of grants post-termination • Local entity changes

  6. Practical implementation considerations • Internal administrative processes • Coordination of US entity, broker, finance team, local payroll, individual participants, etc. • Tax payment and reimbursement

  7. Compliance going forward under Circular 7 • Annual outbound quota renewals • Quarterly statistical reporting • Notification of changes regarding plans, award terms, corporate structure

  8. Questions? • Kim MalviciniAlexion PharmaceuticalsMalviciniK@alxn.com • Keith BilezerianCovidienKeith.Bilezerian@Covidien.com • Joyce ChenOrrick, Herrington & Sutcliffe LLPjoycechen@orrick.com

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