Major Amendments for Offshore ESOPs for Vietnam Employees

State Bank of Vietnam ('SBV') recently came up with amendments to the structure of holding offshore indirect investment. This amendment has been issued vide circular number 23/2024/TT-NHNN ('Circular 23') amending the current mandatory requirements under the rules and regime of the SBV which were creating hindrances for the offshore companies to award equity awards under Employee Share Ownerships Plans ('ESOP') to their Vietnam employees and Vietnam employees from holding offshore investments.

These amendments will come into effect on August 12^th, 2024. These amendments will not only make offshore investment less complex but will also attract the flow of foreign capital into the Vietnam economy, and potentially boost employee equity ownership in Vietnam

Listed below are the major amendments brought out by the Circular 23 of the SBV:

This Circular 23 marks a significant milestone in Vietnam's regulatory landscape for ESOPs. By simplifying the registration process, expanding eligibility, and providing greater flexibility, these new regulations are likely to encourage more foreign entities to offer ESOPs, benefiting both companies and their Vietnamese employees. While the additional bank account requirements and revised monthly reporting may pose some challenges, this change is a positive step towards creating a more dynamic and supportive business environment in Vietnam. These measures aim to attract foreign capital, diversify foreign currency revenues, and mitigate risks associated with offshore indirect investments.

If you would like help in understanding how these changes will impact your existing equity plan in Vietnam, or to understand how to create and rollout a brand new ESOP Get In Touch with Advisory (qapita.com)