Beginner

Do you facilitate options on the platform?

Yes, we absolutely do. Options are widely used and acknowleged. We often offer them as “options on certificates of shares”. Eventually an option is a token moving from one person to the other to indicate whether they have a right to a share, and if so, how many. The token represents an agreement of which […]

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It does not matter if you are a beginner or a pro, questions are always welcomed! We made sure to already answer the most common ones. Do you have a question that is left unanswered? Do not hesitate to contact us 👉 support@sharecouncil.co or start chatting with us!

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Yes, we absolutely do. Options are widely used and acknowleged. We often offer them as “options on certificates of shares”. Eventually an option is a token moving from one person to the other to indicate whether they have a right to a share, and if so, how many. The token represents an agreement of which the value is laid down in a contract and the amount of tokens.

Direct in Shares (happens almost never for employee participation because the shares always have to be transferred via a notary)
– Economic Ownership Rights (rights to the finances of a specific share)
– Certificates of Shares (Depositary Receipts, either via a foundation or a cooperation)
– Options on Certificates of Shares
– Stock Appreciation Rights

Extra’s but insufficient for most:
– Profit Sharing
– Employee boards to give a vote in the decision making process

Stock Appreciation Rights are simply said a bonus based on any value increase of a share. They are a type of employee participation linked to the company’s stock price during a predetermined period of time. They generate profit (literally in the form of a bonus) for employees when the stock price rises. Unlike options, employees do not have to pay to start receiving profits. Nor does any SAR every represent true ownership. Instead, you receive the sum of the value increase in cash or sometimes in depositary receipts. This last way is of course a fantastic instrument to be able to save up for investing in the company and co-own the business as an employee.

An option is a contract that gives you the right to buy a number of effects, such as shares or (often) depositary receipts, within a certain time for a predetermined price. This is especially valuable when the shares increase in price. The employee will be able to buy them for the predetermined (lower) price and will at the moment of acquisition already gain a certain value.

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Beginner

Participation

Direct in Shares (happens almost never for employee participation because the shares always have to be transferred via a notary)
– Economic Ownership Rights (rights to the finances of a specific share)
– Certificates of Shares (Depositary Receipts, either via a foundation or a cooperation)
– Options on Certificates of Shares
– Stock Appreciation Rights

Extra’s but insufficient for most:
– Profit Sharing
– Employee boards to give a vote in the decision making process

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Average

STAK

The value of a depositary receipt corresponds directly to the value of a share. If a share is valued at €10 a depositary receipt is valued at €10. If 10 depositary receipts are given out per share they are each valued at €1. You can give your employees a 15% discount maximum if you wish, because depositary receipts pose some restrictions that you do not see with a share.

There are different options regadering the proportion in which you give out depositary receipts: 1:1, 1:2, 1:5, 1:10, 1:20, 1:25, 1:50, 1:100, 1:1000. When making a choice it is important to take into account how many people will participate and what the value of a share is. For instance, if a share is valued at €100 and you want to keep the threshold for people to participate low, you could choose to give out 100 depositary receipts per share. Then a depositary receipt will be valued at €1. This does mean that the distribution that comes in on that share will be divided over 100 depositary receipts.

That is completely up to you. However, when making this decision, there are a few things to take into consideration. If an employee has 5% ownership or more it is seen as a substantial interest. If this is the case, the employee will be taxed in box 2 for the increase in value. On our platform you can make sure an employee can not get more ownership than 4.9%. Besides that there is a feature that allows you to approve or disapprove of every trade.

The best thing for the employee is to buy the share or Depositary Receipt as soon as possible. If they buy it now, it’s theirs, they don’t pay any more taxes over it, it’s in box 3. If the company becomes very successful then they can keep the profit they made. Phantom shares, stock appreciation rights or options are seen as a bonus by the tax authorities, because you get money later. So, if the company grows, and you get the money, 50% of that goes to the tax authorities If someone starts working for you and you give them depositary receipts. For instance, €100 from their salary is paid in depositary receipts. The tax authorities see this as net salary or net bonus. They will require you to pay salary tax. This is a downside for the company. The more depositary receipts you give out, the more taxes you must pay. In this case an option is better because that’s just a contractual agreement. There’s no money moving. For instance, if an employee gets the option to buy a share for € 10,- when the company is sold and the share is worth € 10.000,- at that point, the employee profits from this. You do have to pay taxes, but you still get a lot. This is an option for when there is not a lot of money on the employees or employers side

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Beginner New

The 8 basic principles of employee ownership

This week I got in contact with the EFES, this is the European Federation of Employee Share Ownership, and they have written fantastic reports on employee participation in Europe. One of the most and first remarkable things I read this week was about the 8 general principles of good practice in Employee Participation Plans, defined by the European Commission already in 2002.

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Beginner

Product

Yes, we absolutely do. Options are widely used and acknowleged. We often offer them as “options on certificates of shares”. Eventually an option is a token moving from one person to the other to indicate whether they have a right to a share, and if so, how many. The token represents an agreement of which the value is laid down in a contract and the amount of tokens.

Direct in Shares (happens almost never for employee participation because the shares always have to be transferred via a notary)
– Economic Ownership Rights (rights to the finances of a specific share)
– Certificates of Shares (Depositary Receipts, either via a foundation or a cooperation)
– Options on Certificates of Shares
– Stock Appreciation Rights

Extra’s but insufficient for most:
– Profit Sharing
– Employee boards to give a vote in the decision making process

Stock Appreciation Rights are simply said a bonus based on any value increase of a share. They are a type of employee participation linked to the company’s stock price during a predetermined period of time. They generate profit (literally in the form of a bonus) for employees when the stock price rises. Unlike options, employees do not have to pay to start receiving profits. Nor does any SAR every represent true ownership. Instead, you receive the sum of the value increase in cash or sometimes in depositary receipts. This last way is of course a fantastic instrument to be able to save up for investing in the company and co-own the business as an employee.

An option is a contract that gives you the right to buy a number of effects, such as shares or (often) depositary receipts, within a certain time for a predetermined price. This is especially valuable when the shares increase in price. The employee will be able to buy them for the predetermined (lower) price and will at the moment of acquisition already gain a certain value.

Discover all the basics
Average

Product

That is completely up to you. However, when making this decision, there are a few things to take into consideration. If an employee has 5% ownership or more it is seen as a substantial interest. If this is the case, the employee will be taxed in box 2 for the increase in value. On our platform you can make sure an employee can not get more ownership than 4.9%. Besides that there is a feature that allows you to approve or disapprove of every trade.


If you agree to a convertible loan, you lend money to the company you work for. In the future you can choose to have your loan paid in shares or certificates. You also have the option to not do this and get paid in cash including the agreed upon interest rate.

Implementing options is relatively cheap and easy. All that is required is a contract stating what the price and rules are regarding the options. The risks for employees are low. If the company’s value decreases they can choose not to use their options and nothing happens. If the company’s value increases and they want to buy shares, they can buy the shares for a lower price than people without options.

The best thing for the employee is to buy the share or Depositary Receipt as soon as possible. If they buy it now, it’s theirs, they don’t pay any more taxes over it, it’s in box 3. If the company becomes very successful then they can keep the profit they made. Phantom shares, stock appreciation rights or options are seen as a bonus by the tax authorities, because you get money later. So, if the company grows, and you get the money, 50% of that goes to the tax authorities If someone starts working for you and you give them depositary receipts. For instance, €100 from their salary is paid in depositary receipts. The tax authorities see this as net salary or net bonus. They will require you to pay salary tax. This is a downside for the company. The more depositary receipts you give out, the more taxes you must pay. In this case an option is better because that’s just a contractual agreement. There’s no money moving. For instance, if an employee gets the option to buy a share for € 10,- when the company is sold and the share is worth € 10.000,- at that point, the employee profits from this. You do have to pay taxes, but you still get a lot. This is an option for when there is not a lot of money on the employees or employers side

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Beginner Average Expert

Fiscal

Yes absolutely! And we think this is a great idea, because the more you can make all your stakeholders owners of your company the more economic stability you create. Do always make sure that the subcontractor sends you an invoice for the work they’ve done. The company can then pay this invoice with certificates, with a total value equal to the invoice. Make sure you calculate how many certificates this should be based on a fair market value of the certificates (the shares of the company). It is common practice to pay the net amount of the invoice in equity and the tax amount (VAT) in cash. This way the subcontractor is not draining on cash while helping you out with your company. We (Share Council) also take the income tax into account and pay this part in cash as well. That’s up to you. All in all, nothing is as beautiful as having these extremely valuable stakeholders close to the company and owning part of the business. Together we make a change.

If shares are vested, the employee is rewarded with shares but will receive the full rights to the shares over a set period of time and/or after a certain milestone is hit. A standard vesting stipulation usually looks as follows: the vesting period is four years. After one year the employee will earn 25% of the shares, then the percentage will increase per month to a total of 100% of the shares after four years.

Options are only taxed when they are exercised. Say your option contract states that you can buy shares for €10. If the company’s value increases to €100 a share and you choose to exercise your option, you have to pay 50% income tax over the profit you make. In this case your profit per share is €90, so you would have to pay €45. If you then take into account that you paid €10 to exercise the option, you have made a profit of €35.

In principle no they are not. When you sell a Depository Receipt to someone else there should be no tax withheld on this sale (what normally does happen on a product in a store). Then why do I hear so much about high taxes on Employee Participation? That has everything to do with the value transaction from an employer to an employee. The tax authorities see every Depository Receipt (shares) transaction as a sale from one to the other, read: value going from one to the other, just as money. So if the employer gives a €10 share to the employee and the employee pays €10 back out of pocket, nothing will be taxed. If the employer does the same but the employee does not pay out of pocket, it is seen as net salary over which the employer is mandated to pay the salary taxes to the tax authorities. This of course also counts when an employer sells a €10 share to an employee which in reality is valued on €100. If the employee pays €10 out of pocket, the tax authorities will still see the other €90 as net income. This goes for any employer to employee transaction. As long as you can prove the employee paid in some way for the transaction, no taxes are withheld. The biggest problem that the tax authorities give us is not giving an easy way to know for sure they accept that valuation of €10 per share. The Dutch tax authorities are unfortunately still relatively unclear about this.

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Beginner Average Expert

Shares

There are four main ways to set up Employee Participation with each their own specific custom adjustments. For that the possibilities are endless. In order from “true ownership” to “no ownership”, the four options are: Certificates of Shares (Depositary Receipts), EOR (Economic Ownership Rights), Options (on Certificates of Shares), SAR (Stock Appreciation Rights)

Yes absolutely! And we think this is a great idea, because the more you can make all your stakeholders owners of your company the more economic stability you create. Do always make sure that the subcontractor sends you an invoice for the work they’ve done. The company can then pay this invoice with certificates, with a total value equal to the invoice. Make sure you calculate how many certificates this should be based on a fair market value of the certificates (the shares of the company). It is common practice to pay the net amount of the invoice in equity and the tax amount (VAT) in cash. This way the subcontractor is not draining on cash while helping you out with your company. We (Share Council) also take the income tax into account and pay this part in cash as well. That’s up to you. All in all, nothing is as beautiful as having these extremely valuable stakeholders close to the company and owning part of the business. Together we make a change.

If a tag along is stipulated, a minor shareholder can decide to sell their shares as well if the major shareholder decides to sell. The minor shareholder can “tag along” with the sale, but is not obligated to. This is used to protect the minor shareholder, because they may not be looking forward to working with the buyer.

If a drag along is stipulated and a major shareholder wants to sell their shares, minor shareholders can be obligated to sell as well. This way all shares can be sold to one buyer under the same conditions. It is used to protect the major shareholder, because buyers often don’t want to work with minor shareholders. This way it is easier for the major shareholder to transfer their shares.

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Beginner New

Een stuk eigendom van je bedrijf verkopen (delen) – dat kan eenvoudiger én sneller

Hoe kan het voor de gewone man/vrouw (zoals jij en ik) binnen Europa (Nederland) makkelijker worden gemaakt om te participeren in niet beursgenoteerde bedrijven? Het antwoord op die vraag behandel ik deze week tijdens mijn online zoektocht naar economisch eigendomsrecht van aandelen.

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