Proposed Amendment to Allow Issue of Restricted Stock to Employees

The executive government has put together a draft amendment to the Company Act, which if passed will allow companies to issue stock to employees with the condition that such stock cannot be transferred within a period of 2 years. Currently, an employee may receive stock warrants and such stock warrants are not transferrable.  Also proposed is a new law to allow a company to redeem issued preferred shares with not just surplus profit or capital resulting from newly issued stock but any other types of assets the company has.  On the same rationale, repatriation of capital as a result of capital reduction can also be made by distributing not just cash to shareholders but other types of properties owned by the company, provided the shareholders in question consent to such distribution.  These newly proposed mechanisms aim to provide companies with greater flexibility in the use of the company’s assets.