In the frame of their fundraising operation, startups company commit to establish and implement stock options plans.
Option is the right for the option holder to buy Share of the issuing company at a predetermined price and period.
The main benefit of the option is to give the opportunity to the employee or independent advisory to benefit from the success and the growth of their company(ies).
The more the company’s business is growing or expanding, the most the value of the shares (linked to the vested options) is increasing.
Stock option plans for companies
The setting up of the stock option plan has for main advantages for the company:
- The preservation of its cash flows in relation to the hiring of high skills employee/advisor with specific modelling of their remuneration with the granting of stop option and a limitation of their cash remuneration;
- The building of the long-term relationship with its employee and independent advisor.
What’s in it in Luxembourg?
The setting up of the stock option plan has for main advantages for the stock options beneficiaries in Luxembourg:
- Their direct involvement in the issuing company and its business’ value increase;
- The benefice from a specific Luxembourg income taxation compared with cash bonus Luxembourg taxation.
Stock option plans are mainly used by US companies but the stock option plans could be set up under Luxembourg law.
There are many possibilities to structure the stock options plans under Luxembourg civil and companies law.
What services do we offer?
- Drafting of the Luxembourg legal documentation to be implemented in relation to the implementation and the management of the SOP;
- Drafting and review of the labor/contractual law aspects involved in the context of the SOP granting to employees and independent advisors;
- Luxembourg legal and tax structuring of the financing structure;
- Drafting and negotiating the Luxembourg tax documentation required for the management of the SOP