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China SAFE

China SAFE. The more things change…. … 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)

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China SAFE

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  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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