ESOP is a fintech’s most effective tool for retaining technology staff, but also where disputes explode most when an employee leaves, because most companies issue ESOP before writing down clearly what happens to the shares when employment ends.
Legal basis to know
Issuing shares to employees of a joint stock company is done within the Law on Enterprises 59/2020/QH14 through a general meeting of shareholders resolution and the company charter, using treasury shares or a new issuance under conditions by company type; for public companies, employee share issuance programmes additionally bear the conditions and procedures of the Securities Law 54/2019/QH14 and Decree 155/2020/ND-CP. On tax, employee income related to ESOP shares is handled under current personal income tax law, with the Personal Income Tax Law 109/2025/QH15 replacing the old law and effective 1 July 2026 as the frame to check when income arises. Holding conditions, transfer restrictions and leaver clawback are set by the ESOP programme rules within what the law allows.
How this applies in practice
Typical ESOP disputes turn on three points: vested shares being bought back at cost by the company, vaguely defined bad leaver clauses, and tax arising at share receipt that nobody warned the employee about. A well-designed ESOP programme must publish the full vesting schedule, good leaver and bad leaver definitions, buyback price and procedure, and the timing and calculation of tax so employees can compute their real take-home value. For a fundraising fintech, the ESOP must also be visible to investors in the capitalization table because it is a future dilution commitment.
What to do now
- Issue written ESOP programme rules before granting shares, covering the vesting schedule, leaver definitions and the buyback mechanism.
- Disclose to employees the expected tax duties at the receipt, holding and transfer milestones with numerical examples.
- Put the ESOP pool and unvested rights into the capitalization table presented to investors in every funding round to avoid dilution disputes.
Frequently Asked Questions
What conditions must a fintech company meet to issue an ESOP?
The company needs a general meeting of shareholders resolution approving the employee issuance programme, clear programme rules on beneficiaries, quantity, price and holding conditions, and a lawful share source from treasury shares or a new issuance under the Law on Enterprises 59/2020/QH14; public companies must additionally meet employee issuance conditions under securities law.
How is tax calculated on ESOP shares?
Tax is determined by the nature of each income item when it arises: the benefit on receiving shares, dividends when distributed and gains on transferring shares are handled under current personal income tax law, with the Personal Income Tax Law 109/2025/QH15 effective 1 July 2026 as the applicable frame to check.
What happens to ESOP shares when an employee leaves?
The fate of ESOP shares when an employee leaves is decided by the published programme rules: the unvested part is usually clawed back, while the vested part may be kept or bought back by the company at the price and procedure in the rules; where the rules are vague, disputes are resolved under the contract and related civil and labour law.
This article has been quality-reviewed by the FLAW AI Legal Council