Establishing a Trust Office (STAK) can help companies separate economic and administrative rights over shares, retain control, and engage employees. However, the establishment process is complex, and common mistakes can be costly and time-consuming. At Share Council, we help companies navigate this process. In this blog, we discuss the common mistakes when establishing a STAK and offer tips on how to avoid them.

What is a STAK?

A STAK is a legal entity that holds shares in a company and issues share certificates to the ultimate owners. This separates economic ownership (certificate holders) from voting rights (the STAK board). This structure provides companies with control and flexibility, but it is important to carefully follow the establishment process to avoid problems.

Common Mistakes When Establishing a STAK

Insufficient Preparation

One of the most common mistakes is not adequately preparing for the establishment process. This includes not fully understanding the legal and tax implications of a STAK.

• Conduct thorough research and consult legal and tax experts.
• Understand the specific benefits and limitations of a STAK for your company.

Unclear Articles of Association

The articles of association of the STAK are crucial for its functioning. Unclear or poorly drafted articles can lead to misunderstandings and legal issues.

• Work with an experienced legal advisor to draft clear and detailed articles of association.
• Ensure the articles cover all important aspects of the STAK’s operation and objectives.

Neglecting Governance Structure

A weak or disorganized governance structure can lead to inefficiency and conflicts within the STAK.

• Establish a solid governance structure with clear roles and responsibilities.
• Implement regular evaluations and audits to ensure the effectiveness of the governance structure.

Lack of Communication with Certificate Holders

Poor communication with certificate holders can lead to distrust and dissatisfaction.

• Hold regular meetings and updates to keep certificate holders informed of important decisions and developments.
• Ensure transparent communication channels and an open dialogue with certificate holders.

Failure to Meet Legal Requirements

Not complying with legal requirements can lead to legal complications and sanctions.

• Stay informed of all relevant laws and regulations regarding STAKs.
• Ensure the STAK meets all legal requirements, such as UBO registration (Ultimate Beneficial Owner).

Insufficient Protection Against Conflicts of Interest

Conflicts of interest can disrupt the functioning of the STAK and damage the trust of certificate holders.

• Implement policies and procedures to identify and manage conflicts of interest.
• Ensure an independent board that can make objective decisions.

Tax Pitfalls

Incorrect tax planning can lead to unexpected tax obligations and financial losses.

• Consult tax experts to develop thorough tax planning.
• Understand the tax implications of dividend distributions and other financial transactions within the STAK.

Tips for Successfully Establishing a STAK

• Thorough Planning and Research: Ensure a detailed plan and conduct extensive research before starting the establishment process.
• Legal and Tax Advice: Consult experienced legal and tax advisors to ensure your STAK meets all legal and tax requirements.
• Clear Communication: Ensure transparent and regular communication with all parties involved, including certificate holders and the board.
• Solid Governance Structure: Establish a strong governance structure to ensure the efficiency and effectiveness of the STAK.
• Regular Evaluation: Conduct regular evaluations and audits to monitor and improve the functioning of the STAK.

The Role of Share Council

At Share Council, we are dedicated to supporting companies in successfully establishing and managing STAKs. Our platform provides the tools and expertise you need to avoid common mistakes and ensure your STAK operates optimally.

• Consultancy and Advice: We offer expert advice on establishing a STAK tailored to your specific needs and goals.
• Compliance Management: We help you comply with legal and tax requirements to minimize risks.
• Governance Optimization: We support you in establishing and implementing a strong governance structure.

Conclusion

Establishing a STAK can offer significant benefits, but the process is complex and full of pitfalls. By conducting thorough research, seeking expert advice, and setting up a strong governance structure, you can avoid common mistakes and successfully implement your STAK. At Share Council, we are ready to support you at every step of this process.

Discover how Share Council can help your company establish a STAK by visiting our website and contacting us. Together, we can ensure your STAK meets all requirements and contributes to the success of your business.