Issuing shares for employees is a way to engage a company’s employees with shares or options in the company. The employee offering and its terms should be tailored to fit the needs of each company. Taxation and tax benefits can be optimized when the employee offering is implemented correctly.
We help in designing and implementing an employee share issue that meets your company’s needs. Our service includes:
- Assisting in defining objectives and selecting the appropriate method of implementation
- Documenting the choices and helping communicate them to employees
- Carrying out necessary preparatory actions such as meeting invitations, agreements, and amendments to the articles of association
- We ensure that necessary actions are carried out in a timely manner and registered correctly.
Employee share issue brings value to the company and its employees
Why implement an employee share issue?
- Commitment and Motivation: Employees feel they are part of the company’s success.
- Financial Incentives: Shares and options allow employees to gain direct financial benefits as the company’s value increases.
- Risk Sharing: The company’s cash flow remains more stable when part of the compensation is based on ownership.
- Attractiveness in Recruitment: Ownership is a competitive advantage that attracts top talent.
When is an Employee Share Issue Relevant?
- At the early stages of the company, when the ability to pay competitive salaries is limited, and the value of shares is low.
- Before a funding round, when investors require the commitment of key personnel.
- When competition for skilled employees intensifies, an employee share issue offers a significant incentive.
Different methods of issuing employee shares
An employee share issue can be tailored to the needs of the company and its employees. Possibilities include:
Direct Share Issue
Employees directly subscribe to shares, becoming shareholders in the company. This is particularly suitable for small and medium-sized companies where the number of employees is manageable.
Stock Option Program
Employees are granted the right to purchase shares in the future at an agreed price. This is particularly motivating when the company’s value is expected to increase significantly.
Employee Fund
In larger organizations, an employee fund can be an effective way to distribute the company’s profits to employees.
Steps of an employee share issue
Implementing an Employee Share Issue Requires Careful Planning
Reson supports you throughout the entire process:
- Preparation
- Defining objectives: Why is the employee share issue being implemented?
- Choosing the right method: Direct share issue, options, or another method?
- Valuation: Pricing of shares or options.
- Planning and decision making
- Preparation by the company board: Board preparations and decisions by the shareholders’ meeting.
- Share issue decision and terms: Subscription period, pricing, and number of shares.
- Communication and execution
- Informing employees: Share issue terms and their implications.
- Collecting commitments and executing subscriptions: Gathering employee commitments and completing share allocations.
- Registration and monitoring
- Registering decisions: Recording decisions in the Trade Register.
- Updating the shareholder register: Keeping the shareholder register up to date and introducing employees to what ownership entails.
Benefits of a successful employee share issue
- Stronger company culture and increased employee commitment.
- The company’s value grows as key personnel stay and strive for success.
- A tax-efficient way to reward employees and distribute risks more evenly.
