萬國法律事務所

Taiwan’s Financial Supervisory Commission (FSC) announced on 8 August 2012 that total quantities of restricted shares issued by public companies will be controlled in the future. Therefore, an enterprise may issues restricted shares to a single employee no more than 1% of its total capital in accumulation. The original regulation stipulated that an enterprise must reward at least ten (10) employees each time it issues restricted shares.

Restricted shares are shares that companies issue to their employees free of charge but with conditions such as employees staying with the employer for a certain period of time or achieving certain work goals or results. Until such conditions are met, the right to transfer or collateralize the shares is restricted.

Under the old regulations, an enterprise may only issue restricted shares to a single employee no more than 10% of the total restricted shares been issued, which means that an enterprise must issue to at least 10 employees each time it issues restricted shares. This has caused difficulties to enterprises when determining which employees to reward, and thus enterprises have pressured the authorities to relax the 10% restriction.

According to the new regulations, an enterprise may issue employment stock options at a discounted price or restricted shares totaling no more than 0.3% of its total capital. For general employment stock options, no more than 1% of its total capital in accumulation can be issued to a single employee to prevent a single employee from taking advantage of the new system. For instance, employment stock options with an extended period of 10 years will be calculated based on the 1% quantity control total.

Employment stock options issued at a discounted price and restricted shares issued free of charge to employees must be passed by a resolution at shareholder meetings. The new regulations are expected to come into force as soon as June 2013.