Stock Option System In Our Country Law Studies

The Executive Stock Option(hereinafter called "the ESO"), originating in America, was introduced into China in the1990s. After that, suitable regulations and guidance documents were successively issued, there gradually formed our ESO legal system. Even so, there are still many worth studying problems both in the legal system itself and its process.,Based on the current situation as mentioned above, this paper taking the subject, the content and the object of the ESO legal relationship as the main thread, seeks for the solution to perfecting the ESO legal system in China through the research of the legal problems in the ESO legal system.From the subject standpoint, the ESO legal relationship is between the company and the incentive employees. Recently, the study center is on the type of the company that can implement the ESO plan as well as the range of the incentive employees. About the former problem, this paper holds that the type of the company that can implement the ESO plan should not be limited within the listed companies. It can be extended to the unlisted companies and the limited liability companies which property rights and the right of management separates. About the latter problem, both the supervisors and the independent directors can be the incentive employees. Only under special circumstance can employees be the incentive targets. In the end, not all of the management employees can be the incentive targets.The problem about the object aspect in our ESO legal system is mainly about the stock source problem. In terms of listed companies, the common methods to solve the stock source problem facing varying difficulties. This paper raises relevant solving methods after analyses the difficulties in the process of share repurchasing, share reserving, new stock issuing and stock transferring from substantial shareholders. This paper holds that the stock source problem in the unlisted companies can be solved by new stock issuing and stock transferring from substantial shareholders, while the problem in the limited liability companies can be solved by stock right transferring and increasing capital.Transferring of shares and repricing problem are the main problems in the content of ESO legal relationship. The limits in the transferring of shares of the incentive employees of the listed companies are not reasonable. The transferring problems in the unlisted companies and the limited liability companies can be solved by a repurchasing clause which breaking the limits of the law as the primary consideration.Repricing is necessary to the ESO plan, whereas it should be strictly limited. It should be limited by accounting rules and dormancy rules. Furthermore, shareholders have the right to increase the exercise price supported by the shareholders’convention when the stock price goes up due less to the effort of the incentive employees.