A Study On Legal System Of Employee Stock Ownership Trust

The employee stock ownership plan(ESOP)is an incentive system which makes employees become both the employees and the owners of the company by purchasing stock of the company.ESOP combines the interest of employees with the company,inspires employees' enthusiasm and improves management.ESOP originated in the United States and played a significant role in alleviating disputes between labor and enterprises and narrowing the gap between the rich and the poor.It has been widely used in Western countries.The employee stock ownership trust applies the trust mechanism on the ESOP and makes full use of the flexibility and professionalism of trust.It is the main pattern for foreign enterprises' employees to hold shares.The ESOP in China began with the reform of state-owned enterprises.In the process of twists and turns,different pattern of holding stocks have emerged.Among these different patterns,the employee stock ownership trust has its unique advantages.In view of our country's legal environment and practice,although our country has carried out the exploration of the employee stock ownership trust both in practice and in theory,we still face many problems.Therefore,it is necessary to analyze the legal nexus of employee stock ownership trust,the existing problems happened during the actual operation of employee stock ownership trust,and try to establish legal institutions of employee stock ownership trust to promote the standardized development of employee stock ownership trust.The thesis consists of three parts:introduction,main body and conclusion.The main body is composed of four chapters.The first chapter is about the comparison of different patterns of ESOP,and the advantages of employee stock ownership trust.First of all,employee stock ownership trust is the best pattern of ESOP by comparing the different patterns.Secondly,the trust system has the superiority and fits ESOP very well.Employee stock ownership trust is beneficial to highlight the incentive and efficiency value of ESOP.The superiority of the trust system,such as the independence of trust property,the trust obligation of the trustee,the professionalism and flexibility of the trust system,makes the employee stock ownership trust more vigorous.On the other hand,China's employee stock ownership trust is also facing many practical difficulties.Firstly,the legal nexus of ESOP trust remains to be clarified.There are still disputes and misunderstandings on the identity of the three parties of employee stock ownership trust.The Second chapter is analysis of many problems in the actual operation of the employee stock ownership trust.First,the legal structure of employee shareholding trusts remains to be clarified.At present,there are still controversies and misunderstandings in the academic community regarding the rights and obligations of trustees,trustees,and beneficiaries respectively.Secondly,there are still many problems in the actual operation of employee shareholding trusts,such as disputes over the entity and scope of exercising the equity,and the mechanism for employee to exit is not yet clear..The Third chapter is the clarifying of the legal structure of employee stock ownership trust.The employees are both trustor and beneficiary and the trustee is mainly trust company in China.The object of the employee stock ownership trust is employees' stock.The trustee shall undertake fiduciary duty constituted by the duty of diligence and the duty of loyalty,which means trust company shall manage the trust affairs personally,have duty of information disclosure in time and so on.In addition,due to the particularity of employee stock ownership trust,trust institutions also undertake special obligations.For example,the benefit maximization of beneficiary shall be the exclusive purpose of duty of loyalty.The trust company should not onlypay reasonable attention,but also reach the level of prudent experts.The Fourth chapter analyzes the problems arising from the actual operation of employee stock ownership trust.The trust company is the nominal shareholder and exercise subject of equity which is common share consisting of self-right and common right.Based on the professional knowledge and skills of the trust companies,trust companies should be given discretionary space on the basis of reflecting the wishes of their shareholders.In order to maintain the stability of the management and realize the purpose of the ESOP,there should be some limits to prevent the employees from transferring their shares at random for speculative purposes.On the other hand,a clear exit mechanism should be set up to guide employees to transfer shares in an orderly way.