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SAFE Issues New Guidelines for Equity Incentive Plan Registration

March 27, 2012

By DAVID WANG, LU YI, STANCY QIAN & SIGN KADOUH

Circular 7 replaces Circular 78 and expands SAFEs current regulation of domestic individuals participating in equity incentive plans of overseas listed companies. Notable changes under Circular 7 include (i) award holders who are foreigners in China are now subject to foreign exchange registration, (ii) silence on the Circular 78 restrictions on the source of funds used to exercise awards, and (iii) silence on the Circular 78 requirement to remit all proceeds from the sale of shares underlying the awards back to China.

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Image: David S Wang
David S Wang
Partner, Corporate Department