Setting up an ESOP

Companies can implement ESOP through a trust structure, which is applicable to Hong Kong listed companies or companies planning to go public. The listed company (settlor) establishes a trust with a trustee to incentivize employees. Funds, stocks, or options are injected into the trust through methods such as allocation, issuance, or secondary market transactions. The trustee is responsible for managing and utilizing these assets and distributing the benefits to the beneficiaries (employees) according to the plan's rules, timing, and vesting conditions. Employees have the option to either sell the stocks to receive the reward funds or continue holding the company's stocks.