All the shares are currently held by me and my two co-founders.
We are hopeful that within a couple of years our company will be sufficiently profitable either to be sold or to be floated on the Stock Exchange.
We have over 200 employees and would like them to share in our success but we would not feel comfortable with any of them becoming shareholders while the company remains private.
How can we reconcile these two objectives as tax-effectively as possible?
Answer
Since you and your two colleagues wish to remain the only shareholders while the company remains private the obvious solution instead of allowing employees to acquire shares is to grant them options to acquire shares in the future.
Instead of the options...
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All the shares are currently held by me and my two co-founders.
We are hopeful that within a couple of years our company will be sufficiently profitable either to be sold or to be floated on the Stock Exchange.
We have over 200 employees and would like them to share in our success but we would not feel comfortable with any of them becoming shareholders while the company remains private.
How can we reconcile these two objectives as tax-effectively as possible?
Answer
Since you and your two colleagues wish to remain the only shareholders while the company remains private the obvious solution instead of allowing employees to acquire shares is to grant them options to acquire shares in the future.
Instead of the options...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
