Almost all global economies have now been impacted by the outbreak of COVID-19, but China remains most affected, with continued lock-downs in various parts of the country. Similar to most government offices in China, the State Administration of Foreign Exchange (SAFE) offices have been closed since January 24, 2020.
Shanghai SAFE is due to resume business to some extent this week, but to minimize in-person contact, it will not fully re-open and has released a number of interim measures regarding SAFE applications for share plans under Circular 7 that will remain in place until the office re-opens. These measures are as follows:
- Neither initial registration, 2020 re-registration nor any de-registration applications will be processed until further notice.
- Quarterly reports can be submitted only once SAFE re-opens.
- Any applications that were submitted before and pending at the time of the SAFE office closure will continue to be processed but any approval certificates will be issued and can be collected only after SAFE re-opens.
- Banks are allowed to accept inbound payments from companies that have not yet received approval for their 2020 re-registration and distribute such payments to Chinese employees. It is unclear whether all banks will do so or whether some (or all) banks will refuse to process payments until approval has been obtained.
- Similarly, banks are allowed to remit outbound payments for companies that have not yet received approval for their 2020 quota application. Again, it is unclear if all banks will do so.
- In both cases (inbound and outbound remittances), the 2020 SAFE approval certificate is to be submitted to the bank as soon as it is available (after SAFE processes the application and re-opens).
Other SAFE offices have not released similar guidance and it currently remains unclear when they will re-open. We understand Beijing SAFE is not accepting in-person submissions of any applications or quarterly reports, but may accept submissions by courier.
As everything related to COVID-19 remains very fluid, please make sure to check back regularly with your Compensation attorney for further updates. For more information on the impact of COVID-19 on other aspects of your business, please review our Coronavirus Resource Center.
We want to thank our colleague Jeff Xu in our Shanghai office for his assistance with this alert.