The 3

rd

Plenary Session of the 18

th

CPC Central Committee put forward that "enterprises of mixed ownership should be allowed to implement employee share-holding

so as to form a community of shared interests between capital owners and workers". Thus

employee share-holding has become an important part of the reform of state-owned enterprises in the New Era. Against this context

it is of great theoretical and practical significance to fully discuss the functions and conditions of the employee share-holding system. The employee share-holding system is an institutional arrangement that enables employees to participate in the production process of the enterprise as workers and shareholders at the same time. A scientific and rational employee share-holding system helps to improve both employee welfare and corporate performance in state-owned enterprises. The employee share-holding system in state-owned enterprises directed towards the community of shared interests in the New Era covers a comparatively broad scope

focuses more on employees' long-term benefits

participation in management and their right to information. It is conducive to improving economic democracy construction of state-owned enterprises

promoting their innovation

and improving their corporate governance.