[Direct answer]In the Beijing area, whether the equity incentive is effective after resignation is specified in the incentive agreement: the unvested portion of the options (not meeting the grant conditions or service period) is usually automatically voided; the vested but unexercised options can still be exercised within the exercise window specified in the agreement; the restricted shares that have been granted are handled according to the repurchase provisions of the agreement (the company often repurchases them at the original price or an agreed price); and most virtual equity and dividend rights terminate upon resignation. The core of the dispute always lies in two aspects: how the agreement terms are stipulated, and whether the resignation is done in good faith or in bad faith.

1. Problem background and typical scenarios

"I'll give you a 1% equity option, which will mature in four years" —— Equity incentives are a standard practice for tech companies to retain core talent, but they're also the most likely to lead to disputes during employee departures: employees believe they should receive three-quarters of the equity after three years of service, while the company insists on resetting everything to zero on the day of departure; verbal promises of dividends and WeChat messages saying "the shares are yours" all become points of contention after an employee leaves. These types of disputes span two legal fields — labor law and corporate law — and the different legal classifications lead to completely different resolution paths.

II. Key points of contention

First, the distinction between incentive types and the nature of rights. Second, the effectiveness of maturity conditions and service period clauses. Third, the different treatment of voluntary resignations and malicious resignations. Fourth, the determination of disputes and the choice of legal protection pathways.

III. Professional analysis by Henglue Lawyers

This case is handled by Beijing Henglu Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the documents issued by the judicial administrative authority) acts as the agent. **First Level: Type-based Rights Definition** - Stock options: The right to purchase equity at a predetermined price in the future. Unmatured options typically become void upon resignation, while matured options can be exercised during the vesting period. - Restricted stock: Granted but subject to unlocking conditions. Unlocked portions become personal property, while unvested portions are handled according to the agreement (e.g., forfeiture or repurchase). - Virtual equity and dividend rights: Not true equity; essentially conditional profit-sharing. Termination of the agreement upon resignation is common, and employees face significant challenges in claiming continued dividends. - Qualification first depends on the agreement text. Without a written agreement, reliance on verbal promises is required to reconstruct the terms. **Second Level: Vesting Conditions and Service Period** - Four-year vesting with a 25% annual rate is generally valid—the rationale is to tie compensation to service duration. However, if the company unilaterally terminates the contract before the service period ends, employees should not bear the consequences of the company’s breach. Judicial practice often allows pro-rata vesting based on actual working time. - Cancellation clauses for unmet performance targets are valid, but the company must prove the assessment criteria and non-compliance. **Third Level: Distinguishing between "Good Faith" and "Bad Faith" Resignations** - Agreements often differentiate resignation scenarios: - Company terminations without just cause (good faith resignations) allow matured portions to be honored as usual, while some agreements accelerate vesting. - Employee-initiated resignations or dismissals due to misconduct (bad faith resignations) invalidate unvested portions and may trigger repurchase clauses. - Carefully review resignation clauses during review—this is the first critical step in dispute resolution. **Fourth Level: Classification and Legal Pathway** - Labor disputes vs. general civil disputes directly impact pre-litigation procedures and statutes of limitations. - Closely tied to employment relationships and serving as compensation components (e.g., incentive shares purchased from salary deductions, promised upon hiring) are typically handled as labor disputes (arbitration first). - Separately signed equity grant agreements with the company or major shareholders as grantors are treated as contractual disputes and directly sued. - Beijing courts prioritize case-by-case analysis of the granting entity, compensation structure, and performance methodology before determining legal pathways. **Fifth Level: Practical Advice** - Employees: - Formalize verbal commitments into written agreements (including granting entity, quantity, vesting schedule, resignation handling, and exercise window). - Retain grant notifications, bylaws resolutions, and exercise communication records. - Carefully review incentive clauses during resignation interviews. - Companies: - Specify clear resignation scenarios and repurchase mechanisms in agreements to avoid "unwritten agreements." - Centralize incentive management through holding companies with standardized terms to prevent ad hoc exceptions. - Beijing equity incentive disputes focus on internet and biomedical companies, with vesting schedules and repurchase pricing as frequent flashpoints. Agreement quality determines negotiation leverage during resignation.

IV. Practical suggestions and legal basis

The first step is to review the agreement: check the incentive types, maturity conditions, and resignation clauses item by item. The second step is to categorize the situations: match the resignation reasons with the benign and malicious clauses. The third step is to calculate the maturity: convert the earned portion based on the actual service time, and retain the assessment and exercise records. The fourth step is to determine the path: first determine whether it is a labor dispute or a contract dispute, and then choose arbitration or litigation. The main legal basis: Articles 23 to 25 of the Labor Contract Law of the People's Republic of China, relevant provisions of the Company Law of the People's Republic of China, and Article 465 of the Civil Code of the People's Republic of China; the specific application shall be subject to the currently effective regulations.

5. Henglu Law Firm's Advice

There are three key points regarding equity incentives: 1. Whether the agreement is valid after termination depends on the type and terms of the agreement. 2. If the company breaches the contract and terminates the agreement, it does not exempt the company from its obligation to redeem the shares. 3. Virtual equity is not real equity; the written agreement is the only legal document. For matters involving equity incentives and labor disputes, you can seek legal assistance through the following channels:Labor arbitration and work-related injury compensationWe can provide a comprehensive solution for services, which includes reviewing the design of equity agreements.Business and contract disputes in enterprisesFor reference, you can check the compliance of the enterprise incentive system regarding platesIntellectual property protection and corporate lawThis section provides reference materials for drafting motivation lettersSpecialised legal services板块。

VI. Frequently Asked Questions

Q1: Can I claim the equity promised verbally after leaving the company?

It's difficult. Equity incentives must be granted in writing with clear subjects and conditions. Oral promises rely on chat records and other supporting evidence, and the success rate of independent claims is low.

Q2: If the company unlawfully dismisses an employee, can the employee still claim the unvested stock options?

There is a claim for space. If the service period is not fulfilled due to the company's breach of contract, judicial practice often supports calculating the mature portion based on the actual working time.

Q3: What is the difference between virtual equity and real equity?

Virtual equity is just a contractual right to dividend income. It does not involve stock registration or voting rights, and it usually terminates upon the termination of the agreement after an employee leaves the company.

Q4: Do equity incentive disputes need to go through arbitration first?

Depending on the nature of the case: for incentives as compensation for labor, the case shall be subject to labor arbitration first; for independent equity grant agreements, the case shall be directly sued as a contract dispute.

Q5: Is it legal for the company to repurchase matured stocks at their original price when an employee resigns?

Refer to the agreement; agreements that clearly stipulate a repurchase mechanism and set a fair price are generally valid, while those that are manifestly unfair can be subject to adjustment.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific cases.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Labor arbitration legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.