New guidelines on overseas stock reward programs

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On June 28, 2024, the Governor of the State Bank of Vietnam issued Circular 23/2024/TT-NHNN, amending Circular 10/2016/TT-NHNN, which provides guidance on the regulations stipulated in Decree 135/2015/ND-CP regarding indirect overseas investment related to overseas stock reward programs. 
      
The key points are as follows:
      

Implementing Entities

The entities implementing the overseas stock reward program (hereinafter referred to as the implementing entities) are organizations established and operating in Vietnam, including:
  • Commercial presences in Vietnam of foreign organizations in the following forms: Foreign-invested economic organizations; Branches; Representative offices; Operating offices of foreign investors in business cooperation contracts;
  • Economic organizations related to foreign organizations through share ownership, capital contribution, or other forms as prescribed by Vietnamese law.

​(​Currently, Circular 10/2016/TT-NHNN only includes the commercial presence of foreign organizations in Vietnam.)

      

Implementation Principles

​The implementation of the overseas stock reward program must ensure the following principles:
  • The overseas stock reward program with Vietnamese nationals as participants can only be implemented through the implementing entities;
  • Foreign currency earned from dividends and other legal income related to the overseas stock reward program must be transferred to Vietnamese nationals through the account implementing the program as prescribed in Article 12 of Circular 10/2016/TT-NHNN;
  • Compliance with regulations on foreign exchange management, income tax obligations, and other relevant regulations of Vietnamese law.
     

Reward Forms

  • Direct rewards with stocks;
  • Other forms of stock rewards overseas that do not result in cash outflows.
​(Circular 23/2024/TT-NHNN adds other forms of stock rewards overseas that do not result in cash outflows, while the current regulation only refers to direct rewards with stocks and rewards with preferential stock purchase rights.)

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