锦州港股份有限公司
锦州港股份有限公司

"Investor Protection-Rules, Risk Knowledge" XXVI.


Release time:

Jan 28,2021

Employee stock ownership plan is related to the governance of listed companies, the deepening reform of state-owned enterprises and the promotion of mixed ownership, which is a kind of institutional arrangement with special value. The revised "the People's Republic of China Securities Law" (hereinafter referred to as the new "Securities Law") has added relevant content of the employee stock ownership plan. This is the first time that the employee stock ownership plan has risen from the level of institutional rules to the level of the "Securities Law". The regulation and implementation of the stock ownership plan provides a legal basis and has considerable progressive significance. Combined with the new "Securities Law" and other provisions, let's understand the relevant content of the employee stock ownership plan.

"Investor Protection-Rules, Risk Knowledge" XXVI.

-- The new securities law publicity of the employee stock ownership plan norms.

Employee stock ownership plan is related to the governance of listed companies, the deepening reform of state-owned enterprises and the promotion of mixed ownership, which is a kind of institutional arrangement with special value. The revised "the People's Republic of China Securities Law" (hereinafter referred to as the new "Securities Law") has added relevant content of the employee stock ownership plan. This is the first time that the employee stock ownership plan has risen from the level of institutional rules to the level of the "Securities Law". The regulation and implementation of the stock ownership plan provides a legal basis and has considerable progressive significance. Combined with the new "Securities Law" and other provisions, let's understand the relevant content of the employee stock ownership plan.

1. What is an Employee Stock Ownership Plan

An employee stock ownership plan (Employee Stock Ownership Plans, or ESOP) generally refers to "a system arrangement in which a company, in accordance with the wishes of employees, legally enables employees to obtain shares of the Company and hold them for a long time, and the rights and interests of the shares are distributed to employees as agreed." The employee stock ownership plan originated in the United States in the 1950 s, and later developed widely in the United Kingdom, France, Japan and other countries.

Generally speaking, the purpose of implementing the employee stock ownership plan is to realize the binding of the interests of the company's workers and owners, mobilize the enthusiasm of employees, and improve the efficiency of the company's management. By holding the Company's stock and entrusting the Employee Stock Ownership Association to participate in the operation and management of the Company's internal employees, a benefit-sharing mechanism is established in which employees can enjoy the company's growth and participate in business decisions. However, the employee stock ownership plan involves a large number of people, and a little carelessness will cause chaos in corporate governance. Therefore, laws and regulations need to be regulated accordingly.

The new Securities Law of 2. on the improvement of employee stock ownership plans.

Compared with the original Securities Law, the new Securities Law has added relevant contents of the employee stock ownership plan, mainly as follows:

First, in the determination of public offerings, employee stock ownership plans, as an exception, can exceed the limit on the number of public offerings of 200 people. Article 9 of the new "Securities Law" stipulates the registration system for securities issuance, and at the same time clarifies three situations for public issuance of securities. Among them, "the issuance of securities to specific objects exceeds 200 people in total" is a public offering, "but the implementation of employee stock ownership in accordance with the law The number of employees in the plan is not counted." This actually improves the regulations on public offerings of securities and makes it clear that the number of employees implementing an employee stock ownership plan does not penetrate the calculation when calculating the number of specific targets.

Second, it reserves institutional space for employees of securities companies to hold shares. The first paragraph of Article 40 of the new Securities Law stipulates that persons who are prohibited from engaging in securities trading, including "employees of securities trading places, securities companies and securities registration and settlement institutions, staff of securities regulatory bodies and other persons prohibited from participating in stock trading by laws and administrative regulations". However, the third paragraph of Article 40 is added: "employees of securities companies that implement equity incentive plans or employee stock ownership plans may hold or sell their own shares or other securities of an equity nature in accordance with the provisions of the securities regulatory authority under the State Council." This provision exempts the equity incentive plan and employee stock ownership plan of securities companies, and reserves legal space for employees of securities companies to enjoy the company's equity incentive plan or employee stock ownership plan.

The Norms and Practice of 3. Employee Stock Ownership Plan

In view of the special significance of employee stock ownership plans, there are a large number of laws and regulations related to employee stock ownership plans. In addition to the additional provisions of the new Securities Law, in general, it is mainly reflected in the following levels:

First, the level of internal party regulations and normative documents of the State Council. In November 2013, the Third Plenary Session of the Eighteenth Central Committee of the Communist Party of China passed the "Decision of the Central Committee of the Communist Party of China on Several Major Issues of Comprehensively Deepening Reform". In the process of adhering to and improving the basic economic system, it is clear that it is necessary to "actively develop the mixed ownership economy and allow the mixed ownership economy to implement employee shareholding in enterprises to form a community of interests of capital owners and workers." In addition, the "Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market" issued by the State Council in May 2014 also clearly "improve the equity incentive system of listed companies and allow listed companies to carry out employee stock ownership plans through various forms in accordance with regulations." This sets a clear direction for the development of employee stock ownership plans.

Second, the level of departmental normative documents. For example, the "Guiding Opinions on the Pilot Implementation of Employee Stock Ownership Plans by Listed Companies" issued by the China Securities Regulatory Commission in June 2014 is a special normative document formulated for the safe and orderly implementation of the pilot employee stock ownership plan. The Guiding Opinions on the Pilot Implementation of Employee Stock Ownership Plans by Listed Companies contains detailed provisions on the implementation of employee stock ownership plans in terms of the basic principles, main contents, implementation procedures, information disclosure and supervision of employee stock ownership plans, which is of great guiding significance for regulating employee stock ownership plans.

Third, the industry regulation level. For example, the Shanghai Stock Exchange issued the "Shanghai Stock Exchange Science and Technology Innovation Board Stock Issuance and Listing Review Questions and Answers" in March 2019, which included issues related to the issuer's implementation of the employee stock ownership plan before the initial declaration. The requirements that the employee stock ownership plan should meet, the "closed-loop principle" of the penetration calculation of the employee stock ownership plan, the issuer's information disclosure requirements, and the verification requirements of intermediary agencies have been answered in detail, it is of great practical significance for the implementation of employee stock ownership plan.

 

In practice, according to public media reports: "Since the beginning of this year, a number of listed companies have announced that their major shareholders or wholly-owned subsidiaries have adopted the introduction of war investment and the simultaneous implementation of employee stock ownership plans for mixed reform. As of December 10, a total of 18 state-owned listed companies have issued 19 employee stock ownership plans this year, of which 11 have been implemented." This shows that the provisions of the new Securities Law on employee stock ownership plan have promoted the promotion of employee stock ownership plan and reflected the positive incentive effect of the system. The gradual improvement of the relevant system rules of the employee stock ownership plan will certainly help to steadily implement the employee stock ownership plan, improve the governance structure of listed companies and give full play to the core role of the capital market in the allocation of resources.

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