The risks of a STAK | Everything about co-ownership

2 min read
Apr 23, 2024 5:00:00 PM

If things go well, co-ownership can lead to a highly motivated company, with happy, valued individuals delivering their best work for years. It also helps bridge the capital gap.

All great things, but what if things don't go well? What happens then?

What happens if the company isn't doing well?

Most likely, the company's valuation will decrease, and shares (and therefore the derived certificates or other instruments) will become less valuable. When an employee buys in at €100 per share initially, it may later be worth €80 per share.

Can the owner be personally liable for the company's lack of success (can the curator show up at my doorstep)?

No, a curator can only hold the board of directors of the BV liable.

Additionally, participants generally won't acquire a "Substantial Interest" (5% or more). This means that you'll be seen as a minority shareholder and will be left out of everything. In case of bankruptcy (and therefore when the curator comes around), everyone will naturally lose their investment.

What are the risks of investing?

The risks include the loss of the original investment and the lack of returns (not receiving possible dividends).

How does it work with leaving the company?

Typically, employees are required to offer their shares to the organization (the company) when they leave the company.

The organization then has the choice to buy back the shares or not. If the organization chooses not to repurchase the shares, usually the opportunity is offered to sell the shares to other employees. If other employees also don't want to take over the shares, then the (former) employee is left with them, and usually, they must offer the shares again a year later.

Whether a departing employee actually has shares they can sell, and whether this can be done at the current price or must be done at the original price, all depends on whether there are restrictions on the shares and whether the employee is a "good-leaver" or "bad-leaver." If there are still "vesting" restrictions on the shares (not all shares are actually owned by the employee because they haven't completed the required time with the company), then the employee can only offer and sell the "vested" shares. If the employee is qualified as a "bad-leaver," they may only get the original price for the shares back or even nothing at all and have to return the shares for free.

Can there be too much inequality because one person has more financial resources to invest than another?

Yes, this could happen. However, there are very good ways to prevent or minimize this. A commonly used method is to set a maximum amount that people can invest in the company. This is also good to limit the risk that an employee puts all their capital into one company. We advise not linking these maximums to income in the company, as this can actually promote inequality. Additionally, we recommend giving the board the ability to veto a transaction if it compromises the principle of equality.

For additional information, please see the following documents:

One-pager over co-ownership (Nederlands)
Introduction presentation of Share Council (Engels)
20-min webinar recording of the presentation you see above
The decision tree to choose how people can participate
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