The Legal Construction Of Employee Stock Ownership Trust Plan In China

The employee stock ownership system originated in the United States.At present,the US ESOP system is one of the most complete systems for employee stock ownership system.The US employee stock ownership plan mostly operates through employee stock holding trusts,and leverages the support of credit funds,and the government grants employers the funds donated by the ESOP program for tax exemption.With the support of the government and related supporting bills,the US ESOP system has developed rapidly.It has played an important role in improving employee benefits and narrowing the income gap.It has become the “second insurance” beyond basic social insurance in the United States.Chinese employee stock ownership system emerged in the reform of the state-owned enterprise shareholding system in the 1980 s.In order to solve the problem of funding difficulties of state-owned enterprises,employee stock ownership has entered Chinese historical stage as a means of equity financing.Employee stock ownership plays an increasingly important role in broadening corporate financing channels,mobilizing employee enthusiasm and optimizing corporate governance structure.Due to the fact that there are not many relevant legislative regulations on employee stock ownership in China,it is mainly the documents promulgated by the Securities Regulatory Commission that standardize the employee stock ownership plan of listed companies and the shares jointly held by the Ministry of Finance,SASAC,and China Securities Regulatory Commission to the employees of state-owned mixed-ownership ownership enterprises.The documents of the plan,aswell as some local laws and regulations,and the absence of legislation resulted in different models of employee ownership in China.Each company operates according to its own circumstances and needs.The main representatives are employee representatives,employee unions,and shareholdings.With respect to the limited partnership holdings and the trust holding model,the laws applicable to various modes,the qualifications of employees holding shares,the methods of funding,and the realization and protection of shareholders’ equity are different.In order to standardize the employee stock ownership plan of listed companies in China,the China Securities Regulatory Commission promulgated the Interim Measures for the Administration of Employee Stock Ownership Plans of Listed Companies(Draft for Soliciting Opinions)(hereinafter referred to as the “Draft for Comment”)and “About” in 2012 and 2014 respectively.The listed company implements the guidelines for pilot projects of employee stock ownership plans(hereinafter referred to as "guidance opinions"),and regulates the employee stock ownership plans of listed companies.Combining these two documents and drawing on the US ESOP system and taking full account of our country’s reality,the employee stock ownership trusts will be the direction in which Chinese companies.Employee stockholding trusts can effectively isolate the property of the trust property from the trustee and the trustee and prevent the company from improperly intervening in the trust plan.The professional management of the trust plan also protects the rights of the shareholding employee and helps to encourage the active participation of employees.Corporate management forms a corporate-employee benefit community and improves the company’s economic efficiency.The flexibility of the trust method can be used to formulate different trust plans based on the characteristics of different companies.The implementation of these advantages of employee ownership through trust means that this approach will be the development direction of future employee stock ownership in China.Through the analysis of the first employee shareholding plan announced by Diruiyiliao,the article finds that in the current practices of employee shareholding trusts in China,there is a widespread situation of improper protection of employee rights,which is mainly reflected in the company’s excessive intervention in employee stock ownership plans.The short duration of the employees’ shareholding trusts,the classification of the trust property,and the unwillingness of the exit mechanism of the employees holding shares.In addition,the problem of too narrow a scope ofemployee participation in the shareholding plan is also an issue that needs to be urgently addressed in the current regulation of China’s employee shareholding trusts.Chinese corporate governance norms,the development of the trust legal system have matured,and the capital market and financial market have gradually improved.It has already had the social foundation for the development of the employee shareholding system.In the context of our country’s laws,drawing on the advantages of the US ESOP system,we can play the role of employee stock ownership trusts best in promoting the common development of employers and employees,and build an employee stockholding trust system that is consistent with our country’s reality.To improve the economic efficiency of enterprises,and to protect the rights of employees holding shares,to clarify the legal status of parties to the trust relationship,to clarify their rights and obligations,and to gradually increase employee benefits so as to realize the function of supplementing social insurance;Pay attention to the cultivation of trust concepts for companies and employees,and encourage employees to actively participate in management.Finally,based on the advantages of the ESOP system,and in response to Chinese unsound and imperfect employee shareholding trust specifications,combined with the goals of institutional construction,several suggestions are made: Accelerate employee stock ownership legislation and include various types of companies;Uniformly stipulates the laws of employee stock ownership;special departments implement specific legislation on employee stockholding trusts,standardize the development of employee stockholding trusts in China,and protect the rights of stockholding employees;and gradually improve supporting laws and regulations,drawing on the US Tax incentives and leveraged employee stock ownership trusts,etc.,gradually explore the use of the trust system to provide credit support for employees holding shares,and give taxpayers more tax benefits.