Recommended actions
Companies that have already implemented or are expecting to implement offshore stock award plans for Vietnamese employees in Vietnam should carefully review the changes under Circular No. 23 compared to Circular No. 10, in order to prepare well for future practice.
Please do not hesitate to contact us should you have any question on the implementation of stock award plans in Vietnam.
In more detail
- Removal of requirement for stock award plans' registration with the SBV
A notable change under Circular No. 23 is that the SBV registration approval is no longer required for an offshore stock award plan to be implemented in Vietnam. Commercial banks where local entities have opened accounts for implementing the plan will be responsible for reviewing documents of stock award plans to ensure compliance with the applicable regulations before providing foreign exchange services (e.g., letting local entities open dedicated bank accounts for plan implementation).
Generally, the documents to be provided to commercial banks include those that show the relationship between the foreign organization and the organization implementing the plan in Vietnam, description of the plan in terms of award forms and award periods, list of employees with Vietnamese nationality who are participating in the plan, and other relevant documents (if any or if requested by commercial banks).
- Monthly reports on the implementation status of stock award plans in Vietnam
Organizations implementing stock award plans in Vietnam will be required to prepare and submit periodic reports on the implementation status of such plans for their Vietnamese employees to the SBV, but remarkably, on a monthly basis instead of a quarterly basis as per the ongoing requirement. The deadline for submission is no later than the 12th day of the month following the reporting month.
A new form as prescribed under Circular No. 23 will be used for the monthly reports. The reports must be sent electronically to the SBV email address at baocaocophieu@sbv.gov.vn. Simultaneously, a hard copy must also be submitted to the SBV.
- Affirmation of the SBV's rule of no money transferred out of Vietnam for offshore stock awards
Circular No. 23 recognizes two forms of offshore stock awards: (i) shares awarded directly and (ii) other stock awards that do not generate any cash outflow to foreign countries. The regulation affirms the SBV strict rule of no money transferred out of Vietnam for the purpose of offshore stock awards, which has been imposed in practice for quite some time.
A year after the effective date of Circular 23, registered stock award plans under which rights to purchase shares with preferential conditions are granted can only be implemented in other forms of stock awards that do not generate cash flows abroad.
