On The Legal Form Of The ESOP Association And Its Legal Status

The ESOP (Employee Stock Ownership Plans) Association is an important part of Employee Stock Ownership System, which has played an irreplaceable and important role in the process of enterprise reform. However, legal form and legal status of the ESOP Association have not been specifically regulated by uniform laws and regulations and hence this may lead to a very embarrassing situation. Several aspects including historical background on ESOPs, the reason and necessity behind the establishment as well as social status have been analyzed in detail in this paper. It is believed that there are some serious problems with China's ESOP Association including no relevant laws and regulations; shareholding workers lack motivation and their position are not valued; workers feel no incentive on the sharing of labor surplus value; corporate culture based on common values have not been embodied thoroughly. In addition, since procedures used in the ESOP establishment process in some companies are not strict enough, also without reasonable rules and regulations as constraint, which all then resulted in workers who can directly perform shareholders'functions and also be ordinary workers, i.e. be a manager and be managed at the same time. On this basis, the contradiction between corporate immediate and long-term interests cannot be resolved inevitably, also one's immediate interests as shareholders will not be met and one's long-term interests as workers will be damaged as well. All of these are extremely unscientific and have been deviated from the internationally accepted practice based on the separation of ownership and management. Through the survey analysis of some companies in Hebei, the author have thought that only ESOP Association have rules to follow and have fixed legal forms; the nature of legal person in non-governmental organization can be clarified; registration eligibility of ESOP can be restored; legal status can be confirmed through trust, then ESOP Association can play a real role and promote economic development and make contributions to the positive development of the company and market economy.