The Legal Obstacles And Countermeasures Regarding To The Executive Stock Option In Limited Liability Company

ESOP(Executive Stock Option Plan)under the current legal system in China refers to a call option,as remuneration package to employees,which a LLC(Limited Liability Company)grants to its employees,who are qualified to obtain stock option right.Employees,who are granted stock options,have the right to buy stock at a strike price(or exercise price)at a certain time(the expiration date).Employees buying this call option will become the shareholders of the company.The current legal system of ESOP becomes a hinder of the development of modern enterprises in China.One of the reason is our legislative body doesn't value ESOP under the LLCs in China.With the development of modern enterprises in China,more and more LLCs prefer to use ESOP as remuneration package for the incentive purpose.But the legal creative or adjustment in China didn't duly and timely support modern enterprises' demands for building up this kind of prominence corporate governance.Although a complete set of laws,including relevant rules and regulations for the ESOP under the companies limited by shares,especially under the public companies,has been set up,and there are a little of rules and regulations,such as the regulating document of No.4 issued by Ministry of Finance,Ministry of Science and Technology,the State-owned Assets Supervision and Administration Committee of the State Council,and No.101 issued by the Ministry of Finance and the National Taxation Bureau in the year of 2016,for the ESOP under the LLCs,it is still far away from a good legal system for the whole ESOP in China.That's why so many negative consequences are arising unceasingly currently,such as the ambiguous rule of strike price,the problems resulting from dormant shareholders,lack of fair tax rule and regulation,the unclear rule and regulation regarding to the source for ESOP,the lack of rational policy on the number of candidates,as well as the lack of protection for the oversea objective,etc.It is highly proposed to set up a systematic,integrated legal system,including rule and regulation for a complete ESOP legal system,especially for the one under LLCs.This article firstly focuses on revealing several big blocks in the practice of ESOP under the LLCs.Secondly this article analyzes the most problems with the current legal system in China,including the problems with the corporate law as well as the regulated documents.Finally this article proposes from the respects of the corporate law,the regulated documents and so on so as to provide reference for the legislative theoretical research.