Equity Incentives, Equity Transfers, Shareholding Platforms, Income from Equity Transfers
The shareholding platform has now become the standard configuration of enterprise equity incentives. Incorporate multiple natural person incentive recipients into the shareholding platform of the limited partnership, so as to achieve a clear and stable shareholding structure at the target company level, effectively protect the dividends and value-added rights and interests of the incentive recipients, and effectively control the equity held by the shareholding platform through GP settings.
There are many advantages to the shareholding platform, and it goes without saying. However, for the incentive object, as a natural person shareholder, the direct shareholding becomes an indirect shareholding, and there are more procedures in the equity withdrawal link, which naturally has more restrictions, especially when the equity obtained before the listing is withdrawn, the problem of indirect shareholding will be more prominent.
Post-listing rules
In order to protect the interests of small and medium-sized investors, the regulatory rules of the China Securities Regulatory Commission have many restrictive provisions on the original shareholders of listed companies after listing.
Among them, the various rules and regulations on actual controllers and major shareholders are the most stringent, but in view of the focus of this article, I will skip it.
The other original shareholders can be roughly divided into two categories:
First, directors, supervisors and senior shareholders. The core of this group is limited to no more than a quarter per year, and the scope of the restriction includes its direct shareholding and indirect shareholding through the shareholding platform;
Second, ordinary employee shareholders. It can be sold at one end after one year after listing**, and theoretically all of them can be sold all at once.
In practice, when applying for an IPO, in order to improve the approval rate, enterprises often "self-pressurize", and most directors, supervisors, senior executives and employee stock ownership platforms will promise to extend the lock-up period to 36 months after listing.
In this way, in practice, directors, supervisors, senior shareholders and ordinary employee shareholders are required to lock up for 36 months like major shareholders, and if they violate the lock-up period limit and advance the first month, their ** income will be owned by the listed company and they will be subject to corresponding penalties.
Individuals in the context of shareholding platforms**
When the original shareholder meets the first condition, if the natural person shareholder directly holds the shares, the operation is relatively simple, like ordinary shareholders can directly sell in the secondary market.
However, for individual shareholders who indirectly hold shares through the shareholding platform, their ** actions are relatively complicated. Broadly speaking, there are two main modes:
First: intra-platform flow, GP repurchase, and individual withdrawal.
The shareholding platform keeps the shares held by the listed company unchanged, and the GP of the shareholding platform buys back the property shares of the individuals who meet the conditions to withdraw, and the repurchase pricing refers to the stock price of the listed company at the time of the individual's withdrawal, so as to achieve the individual's withdrawal.
Under this model, the shareholding ratio of the shareholding platform remains stable, and the actual controller's control over the shareholding platform remains unchanged.
The only drawback is that the capital strength of the GP that undertakes the repurchase obligation is high, because the repurchase amount is often huge when exiting according to the listed stock price.
Second: the platform's ** shares are redirected to reduce capital contributions, and individuals withdraw.
The shareholding platform transfers the shares of listed companies through agreement transfer, open market transactions, etc., in order to obtain equity transfer money, and then the individual shareholders who need to withdraw correspondingly reduce their capital contribution to the shareholding platform to obtain the capital reduction consideration, that is, the equity transfer money, so as to achieve individual withdrawal.
Under this model, the shareholding ratio of the shareholding platform to the listed company decreases, and the control of the actual controller is also reduced accordingly, which needs to be disclosed accordingly.
However, the advantage of this model is that GP does not need to bear the repurchase obligation, so it does not involve the financial pressure of the actual controller or GP.
It should be added that because the second model involves capital reduction, the timeliness of the corresponding procedure will vary greatly depending on the attributes of the shareholding platform. The shareholding platform is a limited partnership, and the procedure is relatively simple, but if it is the first one, it involves a capital reduction announcement, at least a 30-day announcement period, a long cycle, and cumbersome procedures.
This is also one of the reasons why it is generally recommended that shareholding platforms give preference to limited partnerships over ***.
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