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All You Actually Need To Know About Share Options

Posted on: 23 Nov, 17

Running a business can sometimes feel like you’re rowing a boat alone. How can you help incentivise your hand-picked, super team to pick up the oars and get paddling? Just give them shares of course! Or is it that simple? Oury and Clark are back with some rowing lessons.

So I got a letter from a client today

Clark says...
Oury says...

Do you mean like a proper letter through the mail or do you mean an email?… What did it say?

No a proper letter…it was a bit of a brain dump really…and then she started going on about dragon boats… a bit random really, but the gist was that she wanted to give some shares to some employees and some shares to a non-executive director, she did a bit of reading – and then (unsurprisingly) she got a bit lost…she asked herself: Do I want share options? Do they get taxed? Do I get taxed? Does it matter if the people I want to offer shares to are employed or not or whether they are based in the UK or abroad?

Clark says...
Oury says...

good letter… good questions, I’m intrigued though about the dragon boat.

Actually, I got the dragon boat reference in the end, it was an analogy for getting everyone to work as a team, paddle in unison, through clam and choppy waters… so not all that random.

Clark says...
Oury says...

It’s a great analogy because as the owner of a company you do need every one committed and heading in the right direction and it’s the owner that then bangs out the rhythm on the drum.

Here's all you actually need to know about share options...

Wow, you’ve been busy Oury, my head is spinning at the minute just trying to take all of this in… but hang on - are you saying therefore there are NO good options for NON-executive directors. That seems crazy

Clark says...
Oury says...

Well actually you’re right - there is a better solution - check these out...

I’m starting to get my head around this now, which is great, but what about our clients who want to grant share options to UK based employees when the UK company is just a subsidiary of a foreign company?

Clark says...
Oury says...

Very good question Clark! It is common around the world that share options must always be granted in the PARENT company - and so even if you do grant shares in the overseas parent company, when the people getting these options - you must be aware that Foreign companies should still apply to HMRC to have the grant of share options in the overseas parent company recognised as one of the approved share option schemes.

Thanks for clarifying that...and yes, I think it’s a great way to summarise a rather complex topic and as an employer if you get it right AND employees understand it, then they can be a great incentive to ensure everyone paddles strong and in the same direction.

Clark says...

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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.

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