Our Employee Stock Ownership Plan ( Esop ) Research On Trust Model System

After the legal-standardization of Employee Share Ownership Plans (ESOP) in the United States for the first time, ESOP as a type of successful enterprise equity system has rapidly developed in the world. While the practice of inner employee stocks was put into use early in 1990's in China, it had some difference from the west ESOP, that is our inner employee stocks were born accompany with the process of our state-owned enterprises' reform. As a result of underdevelopment of stock-holding economy, lacking clear theory basis and uniform related laws and regulations, the practice of our inner employee stocks in state-owned enterprises has come through a hard time. Various malpractices such as state-owned assets loss and short-term oriented behavior of shareholding employees emerged and the practice of inner employee stocks was stopped in the end.With further reform of our state-owned enterprises and our economic development, the deduction of state-owned equity and multimode of equity are to be fulfilled and social security system are to established. Thus, ESOP is needed in China and the point is the specific form and rules to carry out ESOP in China. Having reviewed ESOP systems all over the world, we found the practice in the United States and Japan may be used for our reference. While the Japan model came into being closely related with its special rules of share-issue and stock exchange, which make disperse investment turned into stocks According to current laws and regulations available in our country, the employee-stock-holding committee has no legal person status and was an inner organization under labor union, so adoption the Japan model in our country is infeasible. On the contrary, with a view to the promulgation of the trust law and related practice of trust companies in our country, the adoption of American model may find out the way for many important problems, say, capital resource, share-holding body, management of employee shares and change of beneficiaries. Therefore, American model may be used for our reference as a new approach to fulfill ESOP in our country.Under the trust model of ESOP, the capital raised according to ESOP plan by various ways serves as trust capital, which should be entrusted by proposed company to trustee and used to purchase shares of proposed company, thus the trustee turns into nominal shareholder in law. The trustee should distribute shares to the employee according to the repayment of the capital step by step and manage the shares. There should be limitation on the transfer of employee shares.. The trustee is nominal transferee of the stock, but the employee involved in ESOP is the real beneficiary.The legal relationship of trust is the most important one in the trust model of ESOP, though the legal relationship of credit would be involved in case of leveraged ESOP, the practice of ESOP is an complex process involved various parties and procedures. Those important matters in practice, such as the establishment of trustee body, source of stocks, source of capital, executing of employee shareholders' voting rights, transfer of employee shares and qualification of employees for ESOP are separately analyzed in this article. Furthermore, this article tries to find an way out in our current legal system.In the end, this article focuses on setting up our ESOP legal system from following aspects: specific procedure in practice, favorable taxation and trust registration to set a series of related regulations for promoting healthy development of ESOP in our country.