6 NOTES FOR EMPLOYEES PURCHASING ESOP

Buying stock under an Employment Stock Ownership Plan (ESOP) is an attractive investment opportunity, but also comes with many risks if not understood. To ensure personal benefits and rights, employees purchasing ESOP need to pay attention to some important issues before participating.

To buy ESOP, employees must meet regulatory standards

ESOP is issued with the purpose of encouraging employees to stick with and contribute long-term to the company. Accordingly, in reality, to be able to participate in purchasing ESOP, employees need to meet certain standards consistent with the requirements of the enterprises.

Standards, list of employees eligible to participate in the program, and principles of stock distribution approved by the General Meeting of Shareholders or authorized by the Board of Directors are also among the conditions that enterprises need to comply with the provisions of law upon issuing ESOP.

Foreign employees can also purchase ESOP

Besides employees who are Vietnamese citizens, foreign employee can also participate in purchasing ESOP if they meet the standards in the regulations for issuing shares according to the employee option program issued by the enterprise.

It should be noted that the issuance and participation in purchasing ESOPby foreigners must ensure regulations on foreign ownership ratio according to the provisions of law.

Employees buying ESOP must make payments through their bank accounts

According to current laws, enterprises issuing ESOP will have to open a blockaded account to receive money to buy shares from employees, except in the case of issuing bonus shares. The blockade will only be terminated after the State Securities Commission has announced the receipt of the issuance results report.

Accordingly, employees must make transfers according to specific instructions in the corresponding ESOP issuance regulations.

Owning shares via purchasing ESOP, employees can be paid dividends

After completion of the ESOP program and completing all required legal procedures, employees will become shareholders of the company and are entitled to receive dividends. The form and level of dividend payment shall comply with the company’s regulations corresponding to the type of shares owned.

ESOP shares are subject to transfer restrictions within a certain period

Employees purchasing ESOP must comply with the stock holding period. ESOP shares can only be freely transferred after the end of the period specified in the regulations issued by the company.

In accordance with legal regulations, ESOP shares will be restricted from transfer for at least 1 year from the date of completion of the issuance.

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