PRC: Navigating China compliance for offshore Equity Incentive Plans | 中国：境外股权激励计划在中国的合规要点

Offshore equity incentive plans are commonly used by multinational groups, offshore holding companies and overseas-listed issuers to align the interests of mainland China-based employees with the wider group. These plans may take various forms, including stock options, restricted share units, restricted shares, employee share ownership plans and employee stock purchase plans.

境外股权激励计划广泛用于跨国集团、离岸控股公司及境外上市主体，以实现中国大陆员工与集团整体利益的有效协同。该等计划形式多样，包括股票期权、限制性股票单位（RSU）、限制性股票、员工持股计划（ESOP）以及员工购股计划（ESPP）。

For mainland China-based participants, however, offshore equity incentives are not simply a matter of global remuneration policy. Depending on the structure, timing and listing status of the offshore issuer, such plans may trigger PRC foreign exchange, tax, corporate governance and overseas listing filing considerations. This update focuses on the PRC compliance framework for offshore equity incentive plans.

然而，就中国大陆的参与者而言，境外股权激励并非单纯的全球薪酬政策问题。根据境外发行主体的架构、实施股权激励的时机及上市状态不同，相关激励计划可能引发中国外汇、税务、公司治理及境外上市备案等不同的合规考量。本文聚焦境外股权激励计划在中国的主要合规框架。

Foreign exchange regulation: the starting point for offshore plans
外汇监管：实施境外股权激励计划的起点

The PRC regulatory framework for offshore equity incentive plans has historically been shaped by mainland China’s cautious approach to capital account transactions and individual participation in overseas securities arrangements. A typical offshore plan may involve mainland China-based participants acquiring rights over shares in an offshore company, making offshore payments to exercise or purchase shares, receiving dividends or sale proceeds offshore, and remitting proceeds back into mainland China. As a result, foreign exchange regulation is often the first and most important compliance issue.

中国大陆监管机构对资本账户交易以及个人参与境外证券安排一向持审慎态度，这一态度也塑造了境外股权激励计划的合规监管框架。典型的境外股权激励安排，通常涉及中国大陆参与者取得境外公司股份的权利、为行权或购股向境外支付资金、在境外收取分红或售股款项，并将所得资金汇回境内。因此，外汇监管往往成为最优先且最为重要的合规问题。

The foreign exchange regime has developed in stages.

与境外股权激励计划相关的外汇监管制度经历了以下阶段性发展：

• Circular 78: In 2007, the State Administration of Foreign Exchange (SAFE) issued Circular 78, which introduced a more structured foreign exchange regime for domestic individuals participating in employee stock ownership plans and stock option plans of overseas listed companies. Circular 78 reflected the early regulatory approach that PRC individuals’ offshore equity participation and related cross-border fund flows should be brought within the foreign exchange control framework.
  
  78号文：2007年，国家外汇管理局（“外管局”）发布汇综发〔2007〕78号文，为境内个人参与境外上市公司员工持股计划及股票期权计划建立了更为结构化的外汇管理框架。该文件体现了早期监管思路，即将境内个人的境外股权参与及相关跨境资金流纳入外汇管制体系。
   
• Circular 7: In 2012, SAFE issued Circular 7, formally the Circular on Relevant Issues Concerning Foreign Exchange Administration over Involvement of Domestic Individuals in Equity Incentive Plans of Overseas Listed Companies. Circular 7 remains the core national-level rule for PRC individuals participating in equity incentive plans of overseas listed companies. It replaced the earlier Circular 78 framework and established a more comprehensive regime based on domestic agency arrangements, foreign exchange registration and designated accounts.
  
  7号文：2012年，外管局发布汇发〔2012〕7号文，即《国家外汇管理局关于境内个人参与境外上市公司股权激励计划外汇管理有关问题的通知》。7号文取代78号文，从国家层面成为境内个人参与境外上市公司股权激励计划的核心法规，并建立了以境内代理、外汇登记及专用账户为基础的更为完备的制度。
   
• Circular 37: In 2014, SAFE issued Circular 37, formally the Circular on Foreign Exchange Administration of Overseas Investments, Financing and Round-trip Investments by Domestic Residents via Special Purpose Vehicles. Circular 37 is not an employee incentive rule in the same way as Circular 7. It is primarily concerned with PRC residents establishing or controlling offshore special purpose vehicles for overseas financing, investment or round-trip investment purposes. It is therefore particularly relevant to founder, controller, senior management and pre-IPO equity arrangements in red-chip or VIE structures.
  
  37号文：2014年，外管局发布汇发〔2014〕37号文，即《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》。与7号文不同，37号文并非专门针对员工激励计划，其主要规范的是境内居民为境外投融资或返程投资之目的而设立或控制境外特殊目的公司（SPV）的情形。因此，该规定与红筹、VIE 架构或拟上市前的创始人、核心管理层及员工的股权安排联系更为紧密。

More recently, regulatory attention has also expanded beyond SAFE rules. Since 2023, the China Securities Regulatory Commission (CSRC)’s filing-based regime for overseas securities offerings and listings by domestic companies has become an important consideration for PRC businesses pursuing overseas listings. Generally, in an overseas listing filing, attention should be paid to the compliance of the equity incentive plan, the internal decision-making procedures, the incentive recipients and their positions, the number and price of awards granted, and whether there is any improper transfer of benefits. While the CSRC regime is not a foreign exchange regime, it can be relevant where a domestic company has adopted, or proposes to adopt, a pre-IPO equity incentive plan at the offshore holding company level.

近年来，监管关注的范围也超出了外汇管理的范畴。自2023年起，中国证监会就境内企业境外发行上市实施了以备案为基础的监管框架，这已成为中国企业寻求境外上市时的重要合规考量。一般而言，境外上市备案中需要关注股权激励计划的合规性、内部决策程序、激励对象及任职情况、授予数量与价格、是否存在利益输送等问题。虽然证监会的备案制本身并非外汇管理制度，但当境内企业在境外控股公司层面实施或拟实施上市前股权激励计划时，相关外汇管理规定也可能产生影响。

Circular 7: overseas listed company equity incentive plans 
7号文：境外上市公司股权激励计划

Circular 7 is the main rule for PRC individuals participating in equity incentive plans of overseas listed companies. It generally applies where the offshore issuer is already listed overseas and PRC-based participants receive equity awards under a plan of that listed company.

7号文系适用于境内个人参与境外上市公司股权激励计划的主要规定。一般而言，在境外股权激励授予主体已在境外证券市场上市，且境内计划参与人依据该上市公司之计划获得激励授予的情况下，7号文将予以适用。

Under the Circular 7 framework, an overseas listed company generally cannot implement an equity incentive plan for mainland China-based employees purely through an overseas online platform. Instead, the plan is expected to operate through a centralised and registered structure:

在7号文框架下，境外上市公司一般无法仅通过境外平台便对中国大陆的员工实施股权激励，而是需要通过登记的方式、在集中的渠道下实施。具体要求包括：

• Domestic agent and overseas trustee: The overseas listed company should appoint a domestic agent in China and engage an overseas trustee. The domestic agent is typically a PRC subsidiary or affiliated entity of the overseas listed company and is responsible for handling foreign exchange registration and related administrative matters for PRC participants. The overseas trustee is generally responsible for administering the plan offshore, processing vesting and exercise, selling shares and collecting or distributing proceeds.
  
  境内代理机构与境外受托机构：境外上市公司应委托一家境内代理机构以及一家境外受托机构。境内代理机构一般为该上市公司在华子公司或关联主体，负责为境内参与人办理外汇登记及相关管理事宜；境外受托机构通常负责境外层面的计划管理、归属与行权处理、股票出售以及价款收付。
   
• Foreign exchange registration: The domestic agent should complete the relevant foreign exchange registration with the competent foreign exchange authority. The registration usually covers the overseas listed company, the equity incentive plan, the PRC participants, the award types, the overseas trustee, the proposed fund flows and the relevant quota arrangements.
  
  外汇登记：境内代理机构应向外汇主管部门办理相关登记。登记内容通常涵盖境外上市公司、股权激励计划、境内参与人、激励类型、境外受托机构、拟定资金汇划路径及相关额度安排等要素。
   
• Designated account: Funds should generally move through designated accounts established by the domestic agent and approved channels. The regulatory objective is to avoid fragmented or uncontrolled cross-border payments by individual employees, which can also avoid relying on each individual's annual USD 50,000 foreign exchange quota. Exercise payments, purchase funds, dividends, sale proceeds and repatriated gains should be handled through designated accounts.
  
  专用账户：股权激励的相关资金原则上应通过由境内代理机构开立的专用账户及核准渠道划转。监管的目的在于避免由个人员工分散进行难以管控的跨境支付，并可避免占用个人每年5万美元等值的便利化购付汇额度。行权/购股资金、分红、售股价款及回流收益等应通过专用账户处理。
   
• Amendment registration: The registration is not a one-off exercise. Material changes to the plan may trigger a requirement to file amendment registration with the foreign exchange authority.
  
  变更登记：外汇登记并非一次性程序。计划发生重大调整时，需要向外汇主管部门办理变更登记。

Circular 37: pre-IPO offshore structures and PRC resident participation 
37号文：上市前离岸架构与境内居民参与

Circular 37 has a different focus from Circular 7. It is most relevant where PRC residents establish or control offshore special purpose vehicles for overseas financing, investment or round-trip investment. This commonly arises in red-chip structures, VIE structures and pre-IPO offshore holding company structures.

37号文与7号文关注的重点不同。37号文主要适用于境内居民设立或控制境外SPV，以实现境外融资、投资或返程投资的情形。这在红筹、VIE以及上市前的离岸控股架构中较为常见。

This distinction is important. Circular 7 is designed for participation in an equity incentive plan of an overseas listed company. By contrast, Circular 37 may become relevant before an offshore company is listed, particularly where PRC resident founders, controllers, senior executives or employees receive equity interests or options in an unlisted offshore holding company.

区分这两个规定的适用范围至关重要。7号文旨在规范境内个人参与境外上市公司股权激励的情形；而在境外主体尚未上市之前，若境内居民创始人、控制人、高管或员工在离岸控股公司层面取得股权或期权等权益，则37号文更为相关。

For pre-IPO offshore equity incentive arrangements, the analysis is often more complex. A PRC operating business may establish an offshore holding company as part of a red-chip or VIE structure, reserve an employee option pool at the offshore level, and grant options or other awards before the overseas listing takes place. Because the offshore issuer is not yet listed, Circular 7 may not be available at that stage. Instead, the company may need to consider whether Circular 37 registration is required or available for relevant PRC resident individuals, including whether registration should be completed before exercise or before the individual acquires actual offshore equity interests.

在上市前离岸股权激励安排下，情形往往更为复杂。境内经营主体可能搭建红筹或VIE结构，在离岸层面预留员工期权池，并在境外上市前授予期权或其他激励。由于该阶段境外主体尚未上市，7号文通常难以适用。公司应考虑是否需要（或者可以）为相关境内居民办理37号文登记，包括登记应在行权前还是在个人实际取得境外股权前完成等问题。

In practice, the application of Circular 37 to employee incentive arrangements can be more sensitive and more fact-specific than Circular 7. Local SAFE practice may vary, and the analysis often turns on whether the participant is a founder, controller, senior executive or ordinary employee; whether the participant holds direct equity, options or indirect interests through a platform; whether the offshore structure involves round-trip investment; and whether the arrangement is implemented before or after listing.

在实务中，37号文对员工激励的适用较7号文更为敏感且依赖具体事实。地方外汇实操可能存在差异，通常需要考量参与人身份（如创始人/控制人/高管或普通员工）、权益形式（直接持股、期权或通过平台间接持有）、是否涉及返程投资以及安排发生在上市前或上市后等因素。

This is a common issue for PRC businesses preparing for an overseas listing. Pre-IPO equity incentives should not be treated as a purely internal HR matter. They may affect the offshore group’s capitalisation table, shareholder structure, beneficial ownership analysis, overseas listing filings and post-listing foreign exchange compliance. If the company expects PRC employees to continue participating in the plan after the overseas listing, it should also consider how the structure will transition into the Circular 7 regime after listing.

对于拟境外上市的中国企业，这是一项常见议题。上市前股权激励不应被视为单纯的人力资源安排，而是可能影响离岸集团的股本结构、股东架构、实益拥有人分析、境外上市备案以及上市后的外汇合规。如拟在境外上市后继续让中国员工参与该计划，还应考虑如何在上市后平稳过渡至7号文框架下实施。

Tax treatment: preferential and deferred policies
税收处理：优惠与递延政策

PRC tax treatment should be analysed separately from foreign exchange registration. Even where an offshore plan can be implemented under the relevant SAFE regime, the company still needs to consider individual income tax, withholding and reporting obligations.

税务处理应与外汇登记分开独立分析。即便在外汇制度下可实施境外计划，企业仍需评估个人所得税的计税口径、代扣代缴及申报义务。

PRC tax rules have historically provided preferential treatment for certain qualified equity incentive income derived from listed company plans. Subject to applicable conditions, certain equity incentive income may be taxed separately from an individual’s annual comprehensive income.

中国税收政策一直以来对特定条件下的上市公司股权激励所得提供优惠待遇。在满足适用条件的前提下，部分股权激励所得可单独计税，不计入员工个人的年度综合所得。

PRC tax rules also provide deferred tax treatment for certain qualified equity incentives. However, companies should not assume that preferential or deferred treatment automatically applies. The analysis should take into account the type of award, the identity and listing status of the grantor, the employee’s PRC tax residency status, the timing of grant, vesting, exercise and sale, and the position of the competent local tax authority.

税法亦对部分类别的股权激励提供递延纳税待遇。但企业不应想当然默认适用优惠或递延政策，而是需要综合考虑激励类型、授予主体及其上市状态、员工的中国税收居民身份、授予/归属/行权/出售的时间点以及主管地税机关的具体口径。

As a practical matter, tax analysis should be completed before awards are granted or exercised, rather than when employees dispose of shares or leave employment. The PRC employer should also confirm whether it has withholding, reporting or assistance obligations.

在实操层面，各公司应在授予或行权前完成税务分析，而不建议等到员工售股或离职时再行处理。境内雇主也应明确自身是否承担代扣代缴、申报或协助等义务。

Key Takeaways
要点总结

Offshore equity incentive plans for China-based employees require PRC-specific compliance analysis. The key question is not only whether awards may be granted, but whether the plan can be implemented through a compliant foreign exchange structure.

针对中国员工实施境外股权激励计划时，应当依据中国法规进行具体的合规分析。核心问题不仅在于能否授予激励，还在于该计划能否通过合规的外汇结构予以实施。

SAFE Circular 7 remains the core rule for PRC individuals participating in equity incentive plans of overseas listed companies. It is particularly relevant for post-listing plans involving stock options, RSUs, restricted shares or similar awards granted by an overseas-listed parent company.

外管局7号文仍是境内个人参与境外上市公司股权激励的核心规则，尤其适用于境外上市后由母公司授予的股票期权、RSU、限制性股票等安排。

SAFE Circular 37 has a different function. It is primarily relevant to PRC residents’ offshore SPV ownership and control, and may be important for pre-IPO equity arrangements in red-chip or VIE structures.

外管局37号文具有不同定位，主要涉及境内居民对境外SPV的持有与控制，对红筹或VIE架构下的上市前激励尤为重要。

Tax treatment should be assessed separately. Preferential or deferred PRC tax treatment may be available in certain circumstances, but it should not be assumed to apply automatically to offshore plans.

税收处理应单独评估。在特定情况下可适用优惠或递延，但不应当然适用，需结合具体情形审慎判断。