As those of you who work with stock programs offered to employees in China already know, the issues related to currency exchange restrictions are a constant challenge. If you are not familiar with the Chinese currency restrictions, the current set of rules published by the State Administration of Foreign Exchange ("SAFE") requires that the fund flow process be pre-approved and that the agent for the issuing company establish a local bank account for the monitored transfer of funds under the stock program. Each year, the agent must apply to SAFE for a quota of the total funds that will be transferred through the local bank account.

For the 2013 quota, SAFE will begin taking applications in October. The process for completing and submitting the application is set forth in SAFE Circular on Issues concerning the Administration of Foreign Exchange Used for Domestic Individuals’ Participation in Equity Incentive Plans of Companies Listed Overseas (Circular Hui Fa [2012] No. 7) (Circular 7). In the case of a first-time quota, all information and documents set out in Circular 7 are required. In the case of a quota renewal, only information and documents that are new or modified will be required. SAFE may request additional information and documents at its discretion.