2012年10月18日
Legal requirements
A stock option is a right that is granted to employees which allows the employee to subscribe to a certain amount of shares of the company at a specific price within a specified period. The purchase price for employees is referred to as the strike price (usually much lower than the market price of the share) and the date before which an employee must exercise their right to buy the granted shares is known as the vesting date,sac longchamp pliage. Once the allocated shares have been purchased,sac longchamp pliage, the employee will have normal voting rights,longchamp, just like any other shareholder of the company.
As a type of equity-based compensation approach frequently adopted by employers in the West, apart from being a good source of cashless monetary reward for the workers, recent research has confirmed that, more importantly,polo homme, being allocated company shares actually has significant positive psychological effects on employees.
"The reciprocity effect we found is really bigger than the incentive effect," explained management professor Peter Cappelli on the findings of a report published by the University of Pennsylvania earlier this year. "We found that when the company does well and the share price goes up and people make more money, their performance in the next period goes up as well."
There are also other benefits of setting up a stock option plan,ralph lauren pas cher, as it can provide employees with a sense of ownership,gucci borse prezzi Delphi Automotive in Talks to B, while cultivating loyalty and commitment at the same time,sac longchamp pas cher.
Are stock option plans often adopted in China?
Although generally seen more as a Western initiative, many may argue that the Chinese culture is actually more compatible with such practices,polo ralph lauren pas cher, considering the typical thriftiness in Chinese characteristics to save for the long-term and that much emphasis is usually placed on feeling valued or having a sense of “belonging” in the community.
However,ralph lauren pas cher, the reality is that this idea has not really taken off in China, with only an estimated 16 percent of companies offering some type of equity compensation scheme for employees and only 8 percent specifically offering stock options. There are many possible reasons for this: firstly, Chinese society continues to see a stronger preference for cash compensation; secondly,sac longchamp pliage,polo ralph lauren pas cher, the current employment market is extremely fluctuant, especially for younger staff, and therefore long-term incentives may not be fully appreciated; and finally,China to lower tariffs on raw materials, daily nec,sac longchamp,polo ralph lauren, there is also the time and cost involved in educating staff about these types of rewards, and without adequate training on how to exercise the stock options, its intended motivational effect could easily be lost in the process.
Many foreign employers also tend to avoid offering shares to their Chinese-based employees, especially when it comes to providing cross-border stock options which are likely to yield additional complications. Using U.S. companies with subsidiaries based in China as an example,Bank of England Supported Geithner's Rate Advice - NYTimes.com,polo lacoste, it is estimated that around 70 percent of the few companies offering stock options have only done so under their normal U.S. scheme, rather than setting up a separate scheme for their Chinese counterparts.
Legal requirements
Perhaps the biggest deterrent to implementing a stock option plan for FIEs is the ambiguity in its associated legal and tax implications. In the past five years alone,ralph lauren,ralph lauren, the Chinese government has released a total of six new circulars affecting equity incentives for income received by individuals (the latest of which was released in 2009),Lifeline Medical System, and even then those who had successfully applied for a plan with the local authorities would testify that much of the process has still not been fully developed yet in the midst of constantly changing regulations,sac longchamp pas cher.
One important point to clarify is that, contrary to popular belief, it is legally possible for a Chinese individual to own overseas listed shares under the current legislations. This right,sac longchamp, however,polo femme, is restricted by the government and will need to be approved on a case by case basis by the China Securities Regulatory Commission (CSRC),Chinese hotel chain bids to be worlds biggest. At the time of writing,polo homme, the rules do not explicitly specify whether the same goes for foreign unlisted shares, but historically it seems that CSRC has not granted many approvals for the holding of unlisted shares purely due to the lack of official guidelines in regulating this type of foreign currency exchange.
For companies looking to roll out stock option plans for employees in their PRC subsidiaries,The ruling Friday means the government will need to seek a p,ralph lauren pas cher, some of the current legal requirements to be considered are as follows:
- The foreign company offering shares must be publicly listed on a foreign stock exchange;
- The PRC subsidiary through which these shares are offered must be a legal entity in China, excluding representative offices and branch offices;
- The PRC entity will only be considered a subsidiary of the foreign parent company if more than 50 percent of its shares are owned by the foreign parent company;
- Foreign exchange transactions of individuals within these plans should only be handled by a qualified security broker registered with the CSRC;
- The foreign account status and exercise share purchases under the plan are subjected to regular reporting requirements to the State Administration of Foreign Exchange (SAFE) on a quarterly basis;
- All equity plans offered to employees within Mainland China should obtain prior approval from both SAFE as well as from the local tax authorities.
As a type of equity-based compensation approach frequently adopted by employers in the West, apart from being a good source of cashless monetary reward for the workers, recent research has confirmed that, more importantly,polo homme, being allocated company shares actually has significant positive psychological effects on employees.
"The reciprocity effect we found is really bigger than the incentive effect," explained management professor Peter Cappelli on the findings of a report published by the University of Pennsylvania earlier this year. "We found that when the company does well and the share price goes up and people make more money, their performance in the next period goes up as well."
There are also other benefits of setting up a stock option plan,ralph lauren pas cher, as it can provide employees with a sense of ownership,gucci borse prezzi Delphi Automotive in Talks to B, while cultivating loyalty and commitment at the same time,sac longchamp pas cher.
Are stock option plans often adopted in China?
Although generally seen more as a Western initiative, many may argue that the Chinese culture is actually more compatible with such practices,polo ralph lauren pas cher, considering the typical thriftiness in Chinese characteristics to save for the long-term and that much emphasis is usually placed on feeling valued or having a sense of “belonging” in the community.
However,ralph lauren pas cher, the reality is that this idea has not really taken off in China, with only an estimated 16 percent of companies offering some type of equity compensation scheme for employees and only 8 percent specifically offering stock options. There are many possible reasons for this: firstly, Chinese society continues to see a stronger preference for cash compensation; secondly,sac longchamp pliage,polo ralph lauren pas cher, the current employment market is extremely fluctuant, especially for younger staff, and therefore long-term incentives may not be fully appreciated; and finally,China to lower tariffs on raw materials, daily nec,sac longchamp,polo ralph lauren, there is also the time and cost involved in educating staff about these types of rewards, and without adequate training on how to exercise the stock options, its intended motivational effect could easily be lost in the process.
Many foreign employers also tend to avoid offering shares to their Chinese-based employees, especially when it comes to providing cross-border stock options which are likely to yield additional complications. Using U.S. companies with subsidiaries based in China as an example,Bank of England Supported Geithner's Rate Advice - NYTimes.com,polo lacoste, it is estimated that around 70 percent of the few companies offering stock options have only done so under their normal U.S. scheme, rather than setting up a separate scheme for their Chinese counterparts.
Legal requirements
Perhaps the biggest deterrent to implementing a stock option plan for FIEs is the ambiguity in its associated legal and tax implications. In the past five years alone,ralph lauren,ralph lauren, the Chinese government has released a total of six new circulars affecting equity incentives for income received by individuals (the latest of which was released in 2009),Lifeline Medical System, and even then those who had successfully applied for a plan with the local authorities would testify that much of the process has still not been fully developed yet in the midst of constantly changing regulations,sac longchamp pas cher.
One important point to clarify is that, contrary to popular belief, it is legally possible for a Chinese individual to own overseas listed shares under the current legislations. This right,sac longchamp, however,polo femme, is restricted by the government and will need to be approved on a case by case basis by the China Securities Regulatory Commission (CSRC),Chinese hotel chain bids to be worlds biggest. At the time of writing,polo homme, the rules do not explicitly specify whether the same goes for foreign unlisted shares, but historically it seems that CSRC has not granted many approvals for the holding of unlisted shares purely due to the lack of official guidelines in regulating this type of foreign currency exchange.
For companies looking to roll out stock option plans for employees in their PRC subsidiaries,The ruling Friday means the government will need to seek a p,ralph lauren pas cher, some of the current legal requirements to be considered are as follows:
- The foreign company offering shares must be publicly listed on a foreign stock exchange;
- The PRC subsidiary through which these shares are offered must be a legal entity in China, excluding representative offices and branch offices;
- The PRC entity will only be considered a subsidiary of the foreign parent company if more than 50 percent of its shares are owned by the foreign parent company;
- Foreign exchange transactions of individuals within these plans should only be handled by a qualified security broker registered with the CSRC;
- The foreign account status and exercise share purchases under the plan are subjected to regular reporting requirements to the State Administration of Foreign Exchange (SAFE) on a quarterly basis;
- All equity plans offered to employees within Mainland China should obtain prior approval from both SAFE as well as from the local tax authorities.
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