When establishing a corporate structure, various options exist to regulate stakeholders' interests. Two common structures often considered are SAR (Separation of Ownership and Economic Interest) and STAK (Foundation Administrative Office). In this blog post, we will compare these two structures and discuss which might best suit your specific business situation.

SAR Structure

Separation of Ownership and Economic Interest

A SAR structure is a business framework where the economic ownership and control of a company are separated. This means that those with control don't automatically possess the economic interests in the company. This might be relevant, for instance, when certain stakeholders wish to participate in management but not bear the entire economic risk.

Advantages of an SAR Structure

Risk Management

Individuals with control can make strategic decisions without personally bearing the economic risk.

Talent Attraction and Retention

Key employees can receive economic interests as rewards while decision-making remains with experienced stakeholders.

Succession Planning for Family Businesses

An SAR structure can facilitate the transfer to the next generation by distributing economic interests among heirs.

STAK Foundation Administrative Office

A STAK is a legal entity established to administer share ownership. This means the STAK is the legal owner of the shares, while the economic benefits go to the economic owners. This could be useful, for instance, in ensuring shareholders' anonymity.

Advantages of a STAK

Anonymity

The identity of the economic owners remains protected as the STAK acts as the legal owner.

Succession Planning and Stability

A STAK can assist in arranging share transfers, such as in inheritance, ensuring the company's stability.

Protection against Hostile Takeovers

The STAK can act as a defense mechanism against hostile takeovers since control does not automatically lie with the economic owners.

Which Structure Best Fits Your Company?

The choice between an SAR structure and a STAK depends on the specific needs and objectives of your company. If risk management, talent attraction and retention, and succession planning are significant considerations, an SAR structure might be a suitable choice. On the other hand, if anonymity, succession planning, and protection against hostile takeovers are priorities, a STAK might be the better option. For personalized advice in making this decision, you can schedule a brief call with Share Council's CEO to weigh the pros and cons for your business.