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Vietnam: State Bank of Vietnam adopts new regulations on offshore-issued stock awards for employees

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In brief

On 28 June 2024, the State Bank of Vietnam (SBV) officially adopted Circular No. 23/2024/TT-NHNN (“Circular No. 23“) amending and supplementing several articles of Circular No. 10/2016/TT-NHNN dated 29 June 2016 regulating offshore indirect investment (“Circular No. 10“). Circular No. 23 will take effect from 12 August 2024.

Notably, Circular No. 23 presents various points affecting the current implementation of offshore stock award plans for Vietnamese employees in Vietnam and embraces most of the SBV existing requirements in practice. We analyze below the changes introduced by the new circular. 

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

  1. 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).

  1. 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.

  1. 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.

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Author

Thuy Hang Nguyen is a partner in Baker McKenzie's Ho Chi Minh City office and the head of the Employment and Labor, and Compliance and Investigations practices in Vietnam.
Her diverse working experience, broad knowledge in various areas of law, and business management qualifications allows her to provide clients with practical and commercially savvy legal advice, and to create effective, strategic and innovative solutions for her clients to navigate around the ever-changing legal landscape of Vietnam.
As head of Baker McKenzie Vietnam’s Employment and Labor practice, Hang is in charge of developing and providing strategy for the practice, training and coaching team members and coordinating the global and regional employment practices when related to Vietnam. She is a member of the Steering Committees for the Firm's JAO and Asia Pacific Employment Practice Groups, and the Global Immigration and Mobility Group. Hang is also a leading authority and frequent speaker on employment and labor law in Vietnam and the Asia Pacific region.

Author

Trung started his career in 2000 as an adviser on foreign investment in Vietnam. His expertise covers a broad range of practices, including corporate, foreign direct investment, labor and employment.
Since joining Baker McKenzie, Trung has specialized in labor and employment law. He has been extensively involved in numerous areas, including employment, labor, compensation and immigration.
Trung has vast experience working on equity award plans for employees. He is the main contact point for Baker McKenzie in Vietnam on this matter.
Trung has also been involved in various development projects sponsored by foreign NGOs and international organizations, which means he has extensive knowledge and insight in both the private and public sectors, as well as regulatory and development issues.

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