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EJIP: An Employee Joint Investment Program
EJIP is a program for employees, management, and directors of a listed company where the employees and company can jointly invest on a voluntary basis by gradually purchasing the company's existing shares on the stock exchange in installments at regular intervals and in equal amounts, using the dollar-cost averaging principle*. The form and method of purchase will be clearly specified at the beginning of the program.
(*Note: Dollar-cost averaging is an investment strategy that reduces price fluctuation risks and provides good long-term returns by investing in equal amounts of money in each installment (e.g., weekly, monthly, or quarterly) over a predetermined time period, regardless of market conditions or stock prices on the investment date.)
EJIP Framework
Benefits of EJIP
Company
 | A long-term incentive for employees which builds a sense of ownership in the organization |
| An employee retention tool |
| An alternative to traditional compensation options such as salary, bonuses, and provident fund |
Shareholders
 | No dilution effect |
| An effective human resource management and retention strategy adds value to the company and benefits shareholders over time |
The difference between EJIP and ESOP
| EJIP | ESOP | |
| Approval to commence the program | The board of directors can approve the program except in case there are directors participating in the program where the approval from the shareholders' meeting is required | The board of directors must propose the program to the shareholders' meeting for approval according to the conditions set out by the SEC |
| Forms of returns | Contribution by the company for the purchase of company’s shares Capital gains and dividends (if any) | Shares or warrants Capital gain and dividends (if any) |
| Impacts on shareholders | No dilution effect. There may be a negative impact on the company's profits but this can be offset in the long run with the improved performance which will result in more stable securities prices. | Possibility of the dilution effect |
| Offering period | As specified in the program | |
Taxation
Participants must pay personal income tax according to the amount contributed by the company as the contribution is deemed remuneration to the employees and the company can deduct the contributions as expenses in the income tax calculation.
Participants must pay personal income tax according to the amount contributed by the company as the contribution is deemed remuneration to the employees and the company can deduct the contributions as expenses in the income tax calculation.
Key Procedures
Related Regulations
- Notification of the Office of the Securities and Exchange Commission No. SorJor. 38/2561 Re: Preparation of Report on Changes to the Securities and Derivatives Holding of Director, Executive, Auditor, Plan Preparer and Plan Administrator, Chapter 2, Clause 7
Companies and program participants are required to report their shareholdings in listed companies in accordance with general requirements, such as reporting every 5% of their holdings or make tender offer upon reaching every 25% threshold.
If the program participants are employees and executives, a company can commence EJIP when approved by the Board of Directors. However, if the rights are offered to directors, the company must comply with Section 90 of the Public Limited Companies Act since this is considered a form of remuneration for directors which must be disclosed in the 56-1 One Report.
Participants must pay personal income tax for the amount contributed by the company and the contributions can be calculated as expenses before deducting the income tax because the amount is considered employee remuneration.
According to the period specified in the project
The company is not required to seek approval from the SEC or SET. However it must disclose the program information and the opinion of the Board of Directors via the SET disclosure system and submit to the SEC a letter certifying that the program complies with the specified rules.
Once having complied with the rules, the executives will be exempted from reporting Form 59 in case of acquiring shares from the program but must disclose all share dispositions and share acquisitions in other cases not exempted by the SEC.
Participants have the same rights as general shareholders e.g. the right to receive dividends, the right to subscribe to newly issued shares, and the right to attend and vote at meetings.