​Equity Instruments​

​​​​​​​Employee Joint Investment Program (EJIP) of a listed company

Regulatory Summary

Objectives

EJIP is a program which creates returns for directors and employees to create motivation to work and build the sense of ownership of the company.  It is similar to ESOP (the difference is that EJIP is based on existing shares, whereas ESOP involves issuing new shares for capital increase)

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Principles

• Creates returns to directors or employees

• Application of approval for EJIP must be submitted to the SEC because the offer for the sale of shares to executives must be reported pursuant to section 59 of the Securities and Exchange Act which may be burdensome and affect the confidential information on the salary. Therefore, if EJIP is approved by the SEC, the executives will be exempted from the reporting requirements under section 59.

• The criteria for approval of the program is that it must be demonstrated that internal information is not used to the benefit the executives.
  
  

Criteria for consideration

• Contribution must be regularly made to the program in order to clearly indicate the number of shares to be purchased, without having to use internal information to restructure the contribution in such conditions as may be beneficial to the executives.

• The purchase date must be clearly specified in order to avoid any doubt whether internal information is used to the benefit of the executives.

• The program must be administered by an intermediary, such as a securities company, to make it clear that an outside person who does not have access to internal information will make the purchase order.

• EJIP accounts must be separated from personal accounts for clarity and accountability.

• The program must be approved by the board of directors.  
  
  

  ​The SEC approves within ten working days

Related Rules and Regulations

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