This means that a company sells only the economic rights of a share to an employee. The legal ownership stays with the company (or original owner of the share), but any economic gains or losses are for the “new owner”. It means that the original owner of the share waives their economic ownership rights to their shares. You transfer this economic ownership right to someone else who is now entitled to the profits that come in on the share and the increase or decrease of the share’s value. Legally, the original owner still owns the share, but someone else is entitled to any dividend paid out or any losses or profits when the share is sold. The rights to vote or reflect remain with the legal owner of the share.
Business Valuation is something you will encounter at some point in your company’s development, probably sooner than you think. For employees, the value of their participation in the company may be more relevant. It is easy to get caught up in all the jargon, but really it is rather simple and I’ll try to explain here how it works and how it can be done.Read more
What is a holding company? Here at Share Council it’s a common question that deserves more explanation. We often come across this item when setting up employee participation structures. A holding is not obligatory for employee participation, but it may come in handy. Briefly put, a holding entails that one BV holds shares in one […]Read more