Share plans compliance for global participants has the reputation of being complex, difficult and often expensive. We take a look at ways you can manage the process, keep costs low and have a successful share plan across numerous jurisdictions.
1) Believe you can do it!
Too many companies assume it is too difficult, and do not extend their share plans internationally, and make cash alternative arrangements. This is such a shame – your overseas-based teams can be just as motivated by an employee share plan. Remember that thousands of companies around the world – big and small – manage to successfully operate their plans internationally.
2) Learn from like-minded professionals
There are some excellent professional bodies for equity professionals, including the Global Equity Organization (https://www.globalequity.org/geo/index.php), and the National Association of Stock Plan Professionals (https://www.naspp.com). Many countries have national organisations promoting employee share ownership, such as ProShare in the UK (https://www.proshare.org). Joining these organisations is an excellent way of learning from others and seeking advice.
3) Get your plan design right
Good plan design is key, whether your plan is in one jurisdiction or multiple countries. If you are launching a plan internationally, take advice on the compliance consequences. It might be that small adjustments to the plan before the launch make your life much easier.
4) Consider both legal and tax issues
A share plan always has both regulatory and tax issues. You might have to file papers with national authorities, and there are sometimes annual tax declarations. Plus, you need to be aware of the tax consequences of the different phases of your plan – for the parent company, the local company and, not least, the participants themselves.
5) Use professional advice carefully
Costs can quickly spiral out of control if you engage specialist advice in every country. By identifying material issues at the outset, you can control your budget and avoid paying top dollar for routine work.
6) Look at the technology options
A few specialists have set up databases of international regulatory and tax information. These can help reduce costs significantly, and give you a practical, commercial view of the issues. They are usually regularly updated, and available on a subscription basis, meaning the ongoing compliance can be budgeted.
7) Don’t forget employee communications
Companies tend to focus on employee communications to encourage take-up of the share plan, but then neglect to keep the employees informed about the plan during its lifespan. Employees need to understand the tax (and sometimes regulatory) issues of the plans, and giving them tax guides for their country is recommended.
8) Some countries might be ‘impossible’ – it’s best to accept this reality
There are some countries where running your plan may just prove so difficult that it best to take a pragmatic view and accept that you will have to exclude them from the standard plan. Giving a cash alternative is a perfectly acceptable way to go.
9) Employee numbers make a difference
It is often assumed that it not worth operating a share plan in a country where you only have a handful of employees. In reality, the opposite can be true and your compliance risk rises with employee numbers. This is especially the case with security law filings.
10) Work with your administrator
The administrator of your share plan is a key ally, and should be able to offer some practical tips as to how other companies deal with international issues.
If you have any questions about your international share plans, please get in touch.