Tesla fined Rmb70,000 for violating equity incentive plan

Recently, Tesla Auto (Beijing) Co., Ltd. was punished by the State Administration of Foreign Exchange Beijing Branch for violating foreign exchange registration management regulations with a fine of RMB70,000.

The type of violation involved Articles 2 and 8 of the "Notice of the State Administration of Foreign Exchange on Foreign Exchange Management of Chinese Individuals Participating in Overseas Listed Companies' Stock Incentive Plans" (hereinafter referred to as the "Notice").

South Finance News reporter noticed that Article 2 of the Notice states that individuals participating in the same overseas listed company's stock incentive plan shall, through their domestic companies, entrust one domestic agent (hereinafter referred to as the domestic agent) to handle unified foreign exchange registration, account opening and related matters such as fund transfer and exchange, and shall be handled by one overseas institution (hereinafter referred to as the overseas trustee) for unified handling of individual exercise, purchase and sale of corresponding stocks or rights and corresponding fund transfer matters. The domestic agent shall be a domestic company participating in the stock incentive plan or other domestic institutions that can handle asset custody business selected by the domestic company in accordance with the law.

Article 8 states that the domestic agent shall, within three months after the occurrence of major changes in the overseas listed company's stock incentive plan (such as amendments to the key terms of the original plan and the addition of new plans, major matters such as mergers and acquisitions of the overseas listed company or domestic companies that cause changes in the original plan, etc.), submit a written application, the original stock incentive plan foreign exchange registration certificate, the latest filled in "Foreign Exchange Registration Form" and relevant transaction authenticity proof materials to the local foreign exchange administration for change registration.

According to the above provisions, it can be known that the stock incentive plan of Tesla Auto (Beijing) Co., Ltd. may be illegal.

Source: website of the State Administration of Foreign Exchange Beijing Branch

According to Tianyancha, Tesla Auto (Beijing) Co., Ltd. was established in November 2012, with a registered capital of US$2 million, and its sole shareholder is Tesla Auto Hong Kong Co., Ltd.

Source: Tianyancha screenshot