China: Employee Incentives

This country-specific Q&A provides an overview to Employee Incentives laws and regulations that may occur in China.

  1. What kinds of incentive plan are most commonly offered and to whom?

  2. What kinds of share option plan can be offered?

  3. What kinds of share acquisition/share purchase plan can be offered?

  4. What other forms of long-term incentives (including cash plans) can be offered?

  5. Are there any limits on who can participate in an incentive plan and the extent to which they can participate?

  6. Can awards be made subject to performance criteria, vesting schedules and forfeiture?

  7. What are the tax and social security consequences for participants in an incentive plan including: (i) on grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and/or disposal of any underlying shares of securities; (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.

  8. What are the tax and social security consequences for companies operating an incentive plan?

  9. What are the reporting/notification/filing requirements applicable to an incentive plan?

  10. Do participants in incentive plans have a right to compensation for loss of their awards when their employment terminates? Does the reason for the termination matter?

  11. Do any data protection requirements apply to the operation of an incentive plan?

  12. Are there any corporate governance guidelines that apply to the operation of incentive plans?

  13. Are there any prospectus or securities law requirements that apply to the operation of incentive plans?

  14. Do any specialist regulatory regimes apply to incentive plans?

  15. Are there any exchange control restrictions that affect the operation of incentive plans?

  16. What is the formal process for granting awards under an incentive plan?

  17. Can an overseas corporation operate an incentive plan?

  18. Can an overseas employee participate in an incentive plan?

  19. How are share options or awards held by an internationally mobile employee taxed?

  20. How are cash-based incentives held by an internationally mobile employee taxed?

  21. What trends in incentive plan design have you observed over the last 12 months?

  22. What are the current developments and proposals for reform that will affect the operation of incentive plans over the next 12 months?