Share issuance and retention of control
In order to bind your employees to you, it can be interesting to reward your employees by letting them participate in your company. You can involve them in your company in various ways, for example by issuing shares or depositary receipts for shares. Issuing shares implies that employees are given voting rights in addition to profit rights; this is not always desirable. A solution to this situation is to issue depositary receipts for shares.
Depositary receipts for shares
In order to certify shares, a trust office (STAK) must first be set up. Subsequently, a number of shares from the company are transferred or issued to this STAK. This requires a notarial deed.
A number of rules are imposed on this STAK on how to deal with the acquired shares. These rules are laid down in the Administration Conditions. These Administration Conditions require the STAK to issue depositary receipts for the shares received, and to hold the shares itself (including the voting rights on them). By working with a STAK, the control and profit rights on the shares are effectively split. The depositary receipts are then issued to the employees (or other depositary receipt holders). The STAK will then exercise the voting rights on the shares. So if you want to keep control of the STAK, it is important that you yourself are on the board of the STAK.
Share Appreciation Rights
Share Appreciaton Rights are granted to employees in a SAR Plan. It means that the employee is granted a right of claim against the company. The amount of the right of claim is proportional to the development of the value of the shares as issued by the company. It may happen that the employee is obliged to transfer the shares back to the company in case of a 'Bad Leaver' situation. As a result, his claim on the company will lapse. A 'Bad Leaver' is, for example, the employee who has his obligations More information about the SAR plan can be found on our services page: SAR Plan.
Would you like support with any form of employee participation? Our lawyers will be happy to assist you. Please feel free to contact us for more information.