Study On Legal System Of Employee Stock Repurchasing

Employee stock repurchasing is a civil juristic act that employee’s stocks are repurchased by company or worker share-holding congress. We don’t have special regulations about employee stock and employee stock shareholders in our current company laws. There is no high-level law to standard basic rules, too. The judiciary can only rely on local government regulations, normative documents and legal principles of company law to settle disputes. It lead to the phenomenon that legal applicant difficulties and different views of referee in the practice.This article selects the Ningbo City Intermediate People’s court’s “Li’s stockrepurchase dispute with employee stock ownership committee” judgment, study on the problem of employee stock repurchase responsibility when employee turnover there don’t have other workers buy his stocks.This paper is divided into four parts.The first part introduces the basic facts of Li’s stock-repurchase dispute with employee stock ownership committee. It mainly introduces the basic facts of the case and the court of first instance, the court of second instance verdict. In order to lead to the focus of controversy that whether ESOP should repurchase equity or not and whether the company should share repurchase obligation or not.The second part is about the basic legal theory of employee stock repurchase. It defines the concept of employee stock ownership and employee stock repurchase, clarifies the difference between employee stock repurchase and ordinary company stock repurchase because of basis for the repurchase of employee stock repurchase, repurchase situation, repurchase subject and source of funds to buy back, distinguish the difference between employee stock repurchase and transfer of employee stock rights because of transferee of shares, conditions of equity transfer and the price of equity transfer. It also illustrates the special value of employee stock repurchase, which is different from the company stock repurchase.The third part analysis the case in this paper combined with the fact of the case. On the basis of clearing up the relationships among Arts & Crafts Company, employee stock ownership association and Li, carrying out the responsibility involved in this case. Employee stock ownership should bear the responsibility to repurchase and Arts& Crafts Company does not need to bear joint responsibility for the repurchase. There also some degree of thinking about this case that the court shall protect the interests of the employees, distinguish the background of employee stock ownership, respect the autonomy of enterprises in the concrete judicial practice.The fourth part aims at the phenomenon different areas has different regulations of employee stock repurchase and different court have different judgments in practice, think that the legislation needs to follow the basic principles of employee stock ownership, improve the legislative level and make a complete set of rules, giving a specific, clear and a uniform provision about employee stock ownership system. In particular, admitting the independent status of the employee stock ownership association, clarifying the situation of employee stock repurchase, the source of funds to buy back shares and how to deal with employee stock options after the repurchase.To clarify the relationship among the rights and obligations of the three parties of the company, the employee stock holding company and the employees has entities and procedure’s significance. Balancing the interests of employee shareholders and the company and let judicial adjudication to settle disputes to realize the unification of legal effect and social effect, so as to maximize the incentive and welfare value of the employee stock ownership system.