How Employee Share Option Plans Work in Your Companies: Key Concerns & Practical Guidelines

Amid today's fierce market competition, businesses are not only facing challenges to capture market shares but also finding difficulties in attracting and retaining top talent in their companies. Apart from competing on salary alone, the Employee Share Option Plans (ESOPs) would be another mechanism for businesses big and small to award loyal performers.

ESOPs can provide a means for companies to offer employees options to purchase shares of a company according to plan rules during a specified period, usually several years. While ESOPs are widely adopted by listed companies, startups and corporate could also take advantage of this mechanism to reward their employees by translating growth of business into incentives and motivate them to stay with the business for long term development. Nonetheless, despite ESOPs can be an effective tool in retaining and attracting talent, there are also potential risks.

In this roundtable luncheon, Linda Chan from Zegal and Priscilla Wong from Loeb & Loeb LLP will highlight key concerns and practical issues relating to ESOPs, including:-

- Hong Kong tax implications for the award and exercise of share options;
- Mandatory Provident Fund Schemes Authority's guidelines on share options and other non-monetary compensation;
- Shares options, voting rights and the right to dividends; and
- Case law study on disputes relating to share options.