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To enlarge the profit and loss ratio, Sanan Optoelectronics encourages employees to hold "own shares"

The employee stock ownership plan (draft) was disclosed on the 13th. 979 employees, including the company's 11 senior executives, will raise 308.08 million yuan to establish the plan, of which the senior management team contributed 64.3 million yuan, accounting for 20.87%. After the establishment of this shareholding plan, it will be entrusted to be managed by Industrial Securities Asset Management Co., Ltd., and the secondary shares in the Xinzhong No. 1 collective plan established by Industrial Securities Asset Management will be fully subscribed. Xinzhong No. 1 will then purchase and hold Sanan Optoelectronics shares.
The plan shows that the total number of shares held by Xinzhong No. 1 shall not exceed 10% of the total share capital of Sanan Optoelectronics; and Xinzhong No. 1 will complete the purchase of the underlying stocks through the secondary market within 6 months after the employee stock ownership plan is reviewed and approved at the shareholders' meeting.
It should be pointed out that the upper limit of the shares of the Xinzhong No. 1 collective plan is 930 million shares (corresponding funds of 930 million yuan), and priority shares and secondary shares are set up in a ratio of 2:1. Among them, the preferred share will receive income first based on the actual number of days of existence based on the annual benchmark rate of return of 7.4%. In order to protect the income of this part of investors, Sanan Optoelectronics' controlling shareholder Fujian Sanan Group will provide guarantee for the realization of the rights and interests of the preferred share in Xinzhong No. 1.
It is not difficult to see from this that with the help of this graded product, the above-mentioned employees of Sanan Optoelectronics who participated in the investment are equivalent to using a 1:2 leverage in the process of investing and holding "own shares", and the profit and loss ratio is enlarged. It was also disclosed that the sources of funds for the above-mentioned employees’ participation in the stock ownership plan were employees’ legal salaries, self-raised funds, etc. This means that if some employees’ self-raised funds include external borrowing, their actual leverage ratio will be further expanded.
An analyst from a securities firm said that the purpose of adding leverage to Sanan Optoelectronics’ employee stock ownership plan should be to enhance the incentive effect.
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