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Employee Stock Plans: European Start-Up Execs Call for Legislative Reform

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November 29, 2018 | Jennifer Namazi

Employee Stock Plans: European Start-Up Execs Call for Legislative Reform

The CEOs of 30 European start-up companies are calling for changes to the regulations that govern employee stock ownership. In an open letter (“Not Optional—Europe must attract more talent to startups”), the executives called upon lawmakers to overhaul policies they call archaic and highly ineffective.

Citing issues in attracting and retaining top talent, the letter asks legislators to, on a broad basis, align rules that apply to employee stock programs more closely with those of the UK and France, saying that current rules in some jurisdictions (e.g. Belgium) are "so punishing that they put our startups at a major disadvantage to their peers in Silicon Valley and elsewhere, with whom we’re competing for the best designers, developers, product managers and more.” The CEOs are requesting action sooner rather than later, stating that “without delay, we call on legislators to fix the patchy, inconsistent and often punitive rules that govern employee ownership — the practice of giving staff options to acquire a slice of the company they’re working for.” While immediate action is implored, the letter isn’t quite clear on what the specific actions might be, and whether they’d apply to employee stock for all companies or just start-up (private) companies.

The letter is currently open for additional CEOs to add their signatures and will be sent to lawmakers on January 7, 2019.

Administering stock plans in multiple jurisdictions has long been synonymous with complexity and challenge - particularly when it comes to compliance with varied and non-uniform regulations and requirements – spanning tax, employment, exchange control and securities laws. Certainly there is room for improvement in closing the gaps in policies that make administering stock plans both cumbersome and underwhelming from a competitive angle in some countries. It will be interesting to see if this call for action gains any traction and whether any changes will be fast-tracked by legislators in the coming year.

-Jennifer
 

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