Employee equity incentive needs funds. Because in principle, a company cannot buy its own shares. The shares of the company are held by shareholders. According to relevant laws and regulations, the company may not accept the shares of the company as the pledge target.

legal ground

Article 142nd of the Company Law

When a listed company purchases its own shares, it shall fulfill the obligation of information disclosure in accordance with the provisions of the Securities Law of People's Republic of China (PRC).

Article 142

A company may not purchase its own shares. However, except for one of the following circumstances:

(1) Reduce the registered capital of the company.

(2) Merging with other companies holding shares of the Company;

(3) Use the shares for employee stock ownership plan or equity incentive.

When a listed company purchases its own shares, it shall fulfill the obligation of information disclosure in accordance with the provisions of the Securities Law of People's Republic of China (PRC). A listed company shall purchase its shares under the circumstances specified in items (3), (5) and (6) of the first paragraph of this article through public centralized trading.

A company may not accept its own shares as the object of pledge.