VIP Video Library – Session 4

VIP Video Library

The Irish Accounting & Tax Summit

Session 4 - Employee Share Ownership Pools (“ESOPs”) – Tax & Commercial Considerations

Session 4 - Presentation

Session Transcript

This transcript was created using AI and may contain some mistakes.

You’re very welcome here today. Are you sharing the tax track or the tax side? The Irish accounting and tax summers, just a second, a session a day two to so much. So this session is going to start out with your 1220. We hope to finish by one, uh, one 20, you know, hopefully, you know, but more questions are not my call.

We’re a little bit, or, you know, technically be done at one 20. If you want to leave, you can leave at that point in time, you can download the notes for today’s session from your event. Dashboard. Jonathan is also linked in the notes area. And so, you know, if you’re scrolling down to the bottom of the page,

actually one on the right hand sidebar, uh, and go to the event or whatsoever, you’ll get those notes there. Um, we’d also love to hear, get questions from you. Obviously, you know, this is what makes the webinar a lot more attractive for yourselves and it makes it more interesting for the speaker, I would say. Mmm. So if you have any questions as the Oracle is true that this Victor,

this thanks to our topic, please put them in the chat box. We’ll have look, we can get them here on your last point. Our last question, as we go through, and it might be at the end, or it might be as true depending on whether it’s appropriate at the time of presentation. Um, as well as today, then I’m delighted to welcome Laura Lynch of our Lynch and associates.

She’s a charter tax advisor on a federal charter accountants Ireland. Um, she’s she has forged a lot of strong links within the business community, brilliant client base, cross individual and carpets meets professional service firms and business angel investors with a particular interest in the med tech sector. Mmm. So today she’s going to look at them. Laura’s going to look up as well,

incentivizing employees, employee share schemes, the tax and commercial aspects in relation to it. Obviously we’re in a strange environment now. Okay. A COVID-19, uh, you know, money might be tight in the company. So is the sheriffs, you know, giving shares of potential. We have incentivizing employees, you know, to, to increase, grow the business and get some value into there shares from themselves.

So I think it’s very topical. Mmm. And it’s, it’s something that businesses should consider. If you’re trying to retain key staff, trying to call it a business, especially coming back over time where it might’ve stood still to get the employees on board, uh, to, to, uh, two, I suppose, pull it together. I’m trying what builds a business,

which would benefit them yeah. As well in a tax efficient manner. So I’m wanting to hand you over to Laura there now. Okay. So Laura, if you want to go ahead then. Thank you. Thanks John. Good afternoon, everybody. Thanks for coming along. Um, I always confess this as my first time on this site of it,

a zoom with an so if there are any technical issues, it’s entirely my fault. So I hope you just give me a little bit of breathing space on us. I’ve just to share my slides. Um, hopefully everybody can see those, if you can, can you wave your hands? Great. Okay, fantastic. Thank okay. I just minimize this here.

So as John fed, if you have any questions, I take them at the end. We might just go through. So, um, yeah, so what I want to talk about today is if I was giving employees equity or a share of your business and the different ways that a company can do that. Um, and we’re particularly looking at companies because we’re doing this in the context of giving shares or shareholding or share options.

So we have to look at corporate structures in relation to that. Um, and in that context, I’m trying to move on my slides. Okay. So in that context, um, there’s several different ways that you can actually do that. And we go through the different options and methodologies that are open to employers. When they’re looking at putting together and designing at the outside,

set an appropriate employee, share ownership structure for the business. Um, I go through the toxic issues, associations with each item. Um, some of them, some look at it from an employer’s perspective, some of them require the employee to fund the tasks slow. So, um, we looked at the different tax treatments there in relation to those aside,

and then just some kind of practical, legal commercial insights into it, our own experience in terms of what’s important to the employees and the employers, and obviously the accountants and people, you have to find any the shares you have to match scheme and the lawyers who have to put the terminology in place in relation to us. Okay. So I suppose the first thing is why would you give anybody a share of your business?

Um, are there surfer and reasons that you might think about doing that or why it comes up through discussion at board level? I suppose the first thing is best, particularly in a startup situation, we, of companies starting out and they’ve agreed to it. Yeah. They’re full of shouldn’t. They really need to attract key hires and innovative creative people, parking people to get onto that boat,

to bring them to the point of commercialization or a world domination, whatever it is that they’re hoping to achieve. But unfortunately they might have limited cash flow and the, and offer them the opportunity to share the success of the company, because particularly for it’s got huge potential for the future. I’m not just two things. I suppose, that aligns the number one is to attract the people that you’re hoping to attract.

And obviously the mindset that goes with that, that entrepreneurial spirit, and it also aligns corporate goals with the individual goals. So if the individual works hard and executes and does what they were hired to do with Ambasz shoot in turn, increase the value of the company, which in turn increase the value of the shares and they would all share together then on the success of the company,

I on an exit situation, um, in the context of covert, I suppose what we have is cash is King and up might be a more scarce commodity the stage, and they may decide, but we still need to train our way out. We still need to attract key link. And I suppose, as a result of the inevitable, unemployment’s, that’s going to be the scholarship,

the code situation. We’re going to have potentially new startups, new innovation, ideas, new companies who need to employ these people. So again, it’s an opportunity. There’s their spring them on board. They are tax efficient. If nothing else, from their perspective, you don’t pay for your peer size. So if it’s an 11.05% tax saving, every time you give it a share to an employee,

to the extent that it’s in the form of shares as opposed to cash. And so if you’ve got somebody who’s looking for, I want you to hire some, have a salary and you have to pay that to them in cash. That’s actually another 11,000 odd to your payroll cost. Whereas you can avoid that if you, um, divvy up the salary in terms of the bit of shares on a base,

in the context of accuracies by the other time, then that we would see as is that type of company raises funds from external investors, B best fits in the st. Joe’s VCs enterprise, Ireland, or combination of all of them. It’s all it’s off the condition of the investment process. They have to coach an ESOP or an employee share ownership, pool,

and skiing clients together as a condition of taking in the investment. And again, the context of that is be able to have gone to the investors with a business plan that shows, you know, we need your money. A lot of it is going to be used to hire these people. And, you know, the boards on the investors are obviously very much focused on John attracting those right people.

They might have to set aside a certain amount of the equity of the company, um, in order to attract those of key hires. So I suppose I start with the general, and then we drill down into the specific, in terms of the different types of share schemes that are available. Um, so what we would see most frequency and items are restricted shares or a cloud on disposal,

which is basically you get the shares today, but you’re restricted from doing anything with them. You’re restricted from selling them. For example, put her, transferring them to anybody yet it’s for a certain period of time, you’ve also got share options. So an option is an opportunity to see, to buy shares and future. And again, instead of having to pay the market value for that future value,

you have to pay an option price. Generally speaking, that’s going to be less than what the market value is. So you’re getting a bargain there. Obviously. Um, the peat scheme was brought in a couple of years ago, which is a share option scheme is he was brushing for the con in the context of SMEs, but they would have a tax efficient scheme.

And we’d go through the detail of that. And maybe some of the shortcomings associated with that when we tried to implement it for SMEs, um, the other less prevalent ones that you would see are what I would call growth or flowering shares. So you get to share today, that’s effectively worthless, but it would last them into something more valuable in future,

if something happens and you would agree with that herd who might be at the session, and then you might see something, what we might call quasi shares. So they’re restricted stock units and Santam shares and all of these exotic things. And generally you wouldn’t see those in our items. They’re more of an international, particularly us multinational concept. You will come across some sometimes to the extent that you have an Irish Spreadshirt or an Irish operation,

a subsidiary here of a bigger multinational group. And as a result of that, we do need to understand for us at the tax implications. Okay. So I’m now drill down into the more specific types of off share schemes. And the first is restricted shares. So restricted shares are basically, you’re giving them shares upfront. If you’re an employee, you become a shareholder to the company mean,

do you think, um, generally speaking, you won’t have to pay for those shares, or if you do, you won’t have to pay market value for those shares. So you’re going to get a tax benefit as a result of that. Um, they tend to be held within a group structure or sorry, within a trust structure. So they’re held as nominee on behalf of employees,

just as easy as the administration, but it also lends itself to tax efficiency as well. And we look at that shortly, you’d come across a concept called cloud on disposal. And really what that means is that you were proud or you’re prevented, or you’re restricted from selling the shares for a certain period of time. So if you’re going to get a share today and you can set it tomorrow,

that’s obviously a valuable thing. But if you get to share today and you can instead of for maybe five years, but then that’s of less value than a share, you could send a magic thing and that will impact on reaching the value of the sheriff tax purposes. And there’s a specific formula to work out class deduction or reduction from the market funding. Um,

it’s supposed to be, and that’s the context then of restricted shares and the tax efficiency of them commercially. You probably come across, um, concepts of just reverse from investing in good, bad leaver provisions in plain English. What that basically means is if I got shares today in a company I’m being given them because I’m, I’m the new R and D person,

and I’m expected to deliver, uh, uh, commercialize, uh, bringing product to commercialization by doing my orientee over the following three years, I’ll be given a target three years. So I be given shares today, but to make sure I’m locked in and to make sure that I’m, you know, my eyes are on the price. It’s when I’m not going to be able to sell those shoes for a period of three years,

pretty, they won’t be worth anything for a period of time. So if I stayed for less than 12 months, for example, I might open for, I might have to hide my shares back. And am I getting nothing for them? If I stayed the course for maybe 24 months or between two 24 for I, the reverse vesting works well at Fairplay.

Now you put in your 24 months when you were supposed to hang on for three years to achieve this milestone and you haven’t done that. So we give you funding for a certain amount of them. We’ll invest, and we’ll give you market value at today’s date, but for all of the other ones, um, but you were supposed to stay on for the extra year.

So one third of them would not Fest. You get a Euro for that. So that’s how reverse vesting works. And equally then from a good body for possession, and they’re not going to punish or penalize you, for example, if, if you have a medical condition that develops in that time or you pass away or something like that. So you’re a good lady for,

if something like that happens. Um, but everything has been at the bad lever. So you go with your own physician and you don’t work out, or the board fires you, or you go to a competitor or something like that, then yeah, you can craft Heimbach your shares. And you’re probably not going to get core market finding for them. So I’ve got my shares.

And what did the tax implications off that? Well, the first question, any benefit that you give to an employee is going to be taxed at market value minus have they paid for this, the difference between the twos, the BIK, and that’s what subjects P Y. And we talk a bit about valuation later on, but let’s say I have that value now.

And I know what the value of that Sherry’s I’m. I knew what I paid for it. If I’m restricted, if there’s a club in disposal that I can sell that for a period of time, that market value or that BIK find would use to coordinate. So the legislation is set I’ve if you send within, if you were able to set it within in triathlons,

you get no discount. If you can sell after a year, you yes, 10%, just kind out two years, 20% and so on and so forth, roughly 10% per annum, Oh, periods of a sixth year restriction. So if you’re prevented from selling shares for say seven years, well then 60% of today’s value would be taken off and you’d want to be taxed on 40% of the volume as I shared today.

So I suppose these things are always, I just explained with an example. So for example, this employee is given a hundred shares in which it’s limited, and there were 300 euros per share at that point in time, but she only has to pay a penny for that. And she can sell those shares for a period of three years. So we know that the market value of the shares is 30 pounds,

and she only had to pay you or for them. So she’s a BI care BIK there, um, of roughly 35,000. But because she kind of says, I’m for a period of three years, we take 30% off the value of splash, and don’t be 70% of the value or 21 pounds, and just going to be subject to P eye. And she paid 52% tax on mash,

roughly 10 pies and jewels example then. So What if, what happened? Let’s say if that, that was donut in December at the end of the year, and I’d say there isn’t enough, that person has enough salary to cover that tax. I presumed it company, isn’t it explodes? Or what way does that work? Or how does it work from the point of view?

Yeah, no, that’s fine. So what I would say is that with any shares theme, take it as a gift that the tax has to be collected through the PayU system. And that’s why there’s a misconception that is cash flow efficient because the employer thing, should I just give shares? I’m like, I can, I don’t have to pay out any cash,

everything except share options as tool through payroll. And the employer has to fund the PAYG liability. They can collect that back from the employee through payroll. And obviously if that’s going to wipe out December their Christmas bonus or whatever it is, they can spray it out over a period of time and collectors on a month, the basis just to ease the cash flow burden.

If they haven’t done that by the 31st of March of the following tax year, it’s like another events there’s in kind, it’s like, they’ve given you a loan to pay off your tax. And the norm of BIK provisions in relation to a loan to an individual are going to kick in. This is a separate section, section one, two to eight. I think it is the teens with loans to an employee to acquire shares of their employer.

But it’s the same concept you’re deemed to have taken a loan from your employer 15 and a half percent to fascist the value for BIK purposes. And again, pay you, it has to be operations on that. So I did the company pays it over in that December one in that, in that example. Yeah. Which will be January or whatever it is.

Yeah. So the company does have to phone back Pashto, and it’s very important as a result of that for an employer. And it can sometimes be the deciding factor between whether to implement a share option scheme, which is the only situation where the employee has to write the check for the tax upfront, or if the employer has to pay the tax. So why it’s restricted shares?

I’m giving shares upfront just a lower volume might be better from a tax perspective for everybody because the Lord, the volume, the Lord and the tax. Okay. Yeah, it means somebody has to come up with it with the cash to pay that tax or which the revenue commissioners. Okay. So if we go back to the clock situation, so you might recall that the employee,

um, they were able to hold on to their shares and they had to hold on to them for a period of three years. And then it’s again, makes it opportunity. In year four, I make inside of the shares for 1500 euros per share, they pay capital gains tax on the difference. So they’re going to gauge for those ones and shares.

They’re going to get 150,000. Their base cost for, um, capital gains tax perspective purposes is going to be how much they have physically had to pay. In this case. It was only a penny per share, plus whatever they were taxed on under the BIK. Mmm. Provisions. I mean, our example there is 21 five. And so if a game here from 129,

I’m going to pay capital gains tax on mash of 33%. Now, while we see if they qualify for entrepreneur relief, that would pay 10% tax if they meet the conditions, but they have to meet the conditions from the day they make the acquire, the shares front and what amps up for a period of three years. And also they need to own 5% of the company at that time.

That’s quite unusual in the context of the typical Aesop’s that we would see, they would never. And if we would never get more than say, half a percent of 1% of the company, max, what happens then if you were supposed to hold on to your shares for three years, and then the restriction was lifted in year two, maybe an exit opportunity came in and made an offer that you couldn’t refuse and pay to find at school and sell the company and pop.

What happened there is that we recalculate the pik. If, if the period of restriction was not three years, but a 30% discount, we recalculate it as if it was a two year period with only a 20% discount. So that’s addition of time, percent of the value when you got the share, it’s not the value with the exit opportunity. It’s,

recalculations on youth to withholds appear over the Poe on that. So in this case, we have to recalculate the BIK. Um, we was originally a 30 Tyson’s BIK, so there’s an addition of 10%. That’s taxable for 3000 euros. And the employer has to pay that over true to revenue. You stay get your hundred and 50,000, um, with your base cost is increased because now you have increased the amount of which you already paid income tax

So fair is fair. You’re not double taxed in relation to that. And again, you pay 33% CGT on back to schools. So as I was saying, the tax of payments through the PYU system, you can deduct it from the employee and spread it over payroll. If it’s going to be a large number and wipe their pay for certain periods of time.

And as I said, there’s a further BIK then by the 31st of March, the following tax year, if it hasn’t been fully collected from the employee. Okay. So share options, share options are basically an opportunity to acquire shares in future. So the intention obviously is that you’ve worked really hard. And as a result of that, then you’d be rewarded and you can acquire shares in the company future point time.

And if I, as a non-employee person had to pay a certain event, call it market value, use an employee, we get a discount. You be getting there. So we’re price than I do to acquire the same thing. So the difference between the two, the market value minus the option price that you have to pay is going to be the thing that’s subject to BIK.

If the option price of the price the employee has to pay, say, as five-year-olds on the market value of the company, only two euros, but they’re not going to exercise their option. That’s what’s called an underwater option. Provide aye. My exercise price is actually greater than market value. Why would you pay freshmen on the markets? You could only pay two euros from a tax perspective they’re heavily,

heavily taxed. Um, the first thing is that most options are, you’re granted an option to start with them. Normally your option agreements would say, you can exercise this option between this state and this state, and that’s called the option periods. And if the option period or the exercise period is less than seven years, there’s no tax. When you were given are granted the option to acquire shares at each stage for options that are greater than seven years there isn’t in Kentucky charge of fronts.

But again, they’re very, very rare. Normally you would structure them in a way that they would be exercised, but within a period of seven years, the income tax point then is actually when the employee goes to buy the shares at a discount and the discount is the amount, but they have to pay tax on and share options. They’re the anomaly,

they’re the ones where the employee has to come up with check and pay the tax over to revenue. So the employer does not pay the tax to the P Y U system for share option. And that’s really important because when would an employee be able to come up with the tax so that they have to write a check for the shares potentially, or maybe they’re giving them a very low amount and then they have to pay tax over which revenue and they have to pay that tax bill,

which your revenue within 30 days of exercising their option and they have to pay 52% tax over on this. They can demonstrate they’re on a lower refund. So that’s not much time between getting my shares and then finding the cash to pay for them. And that’s why you would normally see share options in the context of a PFC or a multinational, because there’s a,

ragey Marcus fair. You know, there’s a courtesy there. I can send my shares. I can exercise my options today. And I consider entertaining as he said, those shares. So at least there’s cash in the bank. If I need to pay that tax over to revenue within 30 days of whatever I’m left over with that 40% is mine to keep that is the limitation,

I suppose, when it comes to SMEs because we don’t have that frizzy market to sell. So that’s funding that cashflow would have to be funded by the employee. The result of that review is in the context of a private company or an SME, an employee is going to only really exercise their option. And there’s an exit opportunity when there’s an offer on the table to buy their shares or to,

to have a trade Seder, think that I used to thing all together. So that effectively means they’re paying the top range of 52% income tax on the highest market value about the company will ever achieve. Whereas if they had got from their shares under restricted shares theme, maybe three or four years ago, they would only pay company gains tax on that group because they’ve already paid income tax on the older,

lower Mark find you at that time. So again, just to work through a simple example, that an employee is given an option to acquire a bunch of shares in a company they’re worth point naught, one per share, and they can exercise the option between three and seven years after the Dateline. So that ties them in for that three year period. But we need you to be working hard for this period.

I mean, if you do what you said you do with, then we let you come on board and become a shareholder. There’s an exit opportunity in year four. I’m gonna said rice, okay, are probably the cash in the bites, paid for the tech. So I’ll exercise my option now on the shares that are worth $1,500 at that point in time.

So again, the year of exercise is the exit year four. They buy a hundred shares. They only have to pay a Euro for them. So the value really of that benefit and kind of 150,000, and they have to pay 52% tax over to revenue, 78 pies. And within 30 days they’re probably going to sell immediately. So their base costs is that 150,000 Paul signed the exercise price on which they’ve paid techs.

If they get a bunch of them 50 times, and for the shares, there’s obviously no copy of gain. Cause they’ve paid tax on their base cost is equal to what they’re actually receiving for the sale of those shares. Um, so their net proceeds of roughly 40% of the market value at that time, which is quite significant. Um, so in terms of how they work and what legal documents you need.

So employer and employee enter into an option agreement. And again, normally these are the templates is, is drawn up, you know, at the outset and it’s ready to go then. And the same template is used. Every time they decide to grant options to qualifying your participation employee, the tax is due within 30 days as I say it. So usually it’s aligned with the next opportunity.

And as I said, it’s things as issues with liquidity there for SMEs. Um, why would you do it then? Why if the tax is so big, so unempowering might still go down the route, the share option scheme for two reasons, I suppose. Well, it’s number one because of the cashflow. They’re not worried about it’s the employee’s problem,

which have in contrast to every other share scheme. And the other thing is, I suppose, practically speaking, once you bring somebody in as a shareholder, it’s hard to get through to them if they don’t work out and you have to go back to the constitution, the shareholders agreements you’ve dragged along, tagalong preemption rights, you board approvals, you follow the general procedure of stuff.

And then you might still end up going to be gray where your ego, because you’re trying to get rid of this person, who’s underperforming. Whereas an employee who only hits options, they just fall away. If you were gone, never came onto the shareholding register of the company in the first place, your options don’t face, you would never get an opportunity to exercise those options,

which would enable you to acquire the shares. So commercially for those reasons, sometimes even though the tax treatment, doesn’t grace and the might still go down the route of an option sure. Scheme, if an employee exercises, their share options, it makes them a charge for pricing for that tax year. So they have to find a form 11 and the employer has one reports and requirements.

They have to find a forum RSS one with search 1st of March of the following year to disclose any share options granted or exercised in that period. So that brings me onto the keep scheme of the keep schemes, the key point engagement program. So the share option of reviews for tax efficient share option scheme for SMEs, and it was brought him on your finance app,

2017. And basically in, in broad terms, if I exercise an option, I’m an employee and I get one of these and I qualify and I meet all the conditions. Then I won’t pay that 52% tax when I exercise my option. And then when I exercise my option, then I get my shares. And when I sell my shares, I pay capital gains tax on the difference between my sales proceeds are minus whatever exercise price that I had to pay at the time.

So there’s a really massive, um, taxman for therapy because instead of paying 52% of the market value, I to pay 33% of the market value at that time. So it’s a full in-context use a parasite exemption and the share option being. And again also it aligns the cash receipts. So I only pay tax when I sell the shares and I get money from somebody else for those shares instead of having to pay them within 30 days.

And I don’t have the cash nobody’s given me, I haven’t sent my, I haven’t sold my shares yet. So beautiful from a tax perspective, but sadly, it’s very long a piece of legislation with several conditions attaching and our experiences being that it’s very few, particularly in a group situation, it’s very few companies that can actually meet all the conditions. So there’s employer conditions,

there’s employee conditions and there’s, um, conditions attaching to the share options issued under the scheme. And some of the conditions need to be mentioned, the dates with Brent and some of the conditions need to be made throughout the option period between the date of grant and the date. I exercise my option to get the shares and some of the conditions need to be managed on the exercise date.

So even though the company or the employee or the options might meet all of the conditions of the data grant, uncontrollable, things might happen in the meantime as a result of which our intention was that you’d be exempt when you got your shares, you know, you could fall up the last hurdle. Somebody might file a return wrong, or Nate, as a result of which the Ford thing goes back to being an unapproved share option scheme would 52% tax payer within 30 days of exercise.

So I just very briefly run through the conditions just to give you a flavor of what’s actually involved. And I would say it is possible like it is, you know, to qualify for the scheme. And what I’ve seen people do is that they would set their grievance in the hope that they would qualify for the scheme. You won’t know until the share option is exercised.

The shares have issues on photos of that. So say you took grind all the way up. We’re trying to qualify. We know what the rules are, but a lot has to happen in the meantime for to, to achieve that tax cycle. So the company itself has to be Ireland or E corporations. Irish residents are carrying on a business in Ireland through a branch or agency,

and they have to be carrying on trading activities other than excuse activities. And this new definition of excuses activities has been entered into the tax code and it’s aligned with the state age rooms. So why have you seen that? Actually in a lot of tax readings brought in over the last four to five years are there’s a lot of terminology around EU stage age,

and the general block exemption rules, so that we’re compliant with those. So we don’t have to go change in our domestic routes to align with the EU. So things like professional services, which are defined. So it’s not along the tools company, surcharge definition is very tiered list of precious services, such as section, section one, two Ajax financial activity and something to do with land forestry,

coasting, shipbuilding, and any adventures or concerns in the nature of trade. And that that can be problematic. Then it’s not a particularly safe for R and D companies, early stage companies who haven’t commenced to trade yet. There’s uncertainty there. I feel as to whether the share option scheme would qualify for tax rates, Patricia Grant honored those under those criteria. Whereas when you think about us,

it’s still very early stage company. So with the date of Brian to the employer company has to be an SME within EU definition, the tool to market value of issues, but on exercise to qualify options has to be less than 3 million. And I suppose the one big problem with this is the valuation piece, the valuation methodology, how do you value share option and,

and the valuations have to occur at different points of time. And I suppose we’ve been lobbying with revenue for quite some time at this stage to give us some assurance that we can agree safe Harbor provisions, or just parameters within which we can work so much on balance. We have second sheet that if this methodology is used, it would be accepted in the context of a revenue Rochester or review of our ski.

So that’s the day to find things during that exercise period until somebody gets shares on this, the company has to remain on quarters, um, on less it’s, um, it’s sort of the ECM or its equivalent against the state aid thing. I mean, can’t be a company in difficulty as defined under stated rules as holding companies were a big issue when the legislation was originally brought in,

in 2017 and again, in 2018, now they have changed some of the terminology on the Ashton on the criteria for a so haunting companies or group structures can never quantify. Um, but the holding company itself it’s business has to be wholly or mainly, um, a holding Sherry’s and a quantifying subsidiary of subsidiary. So it needs to own more than 50% of the ordinary share capital.

So if you have a holding company that owns exactly 50% say Andre joint venture, if we even told him to qualify, carry on a trade. So we would often, particularly in an Irish context, you might have a holding company set up initially for it to carry on a trade. And then as the business has evolved, or is it stretched to use abroad product,

it might set up a subsidiary to carry on a different aspect maybe, or a different product or different geographic DeMarcus, or hold the IP or something like that. If what was called continues to treat itself, it would not be a qualifying company for key prefaces. Um, and the holding company can’t itself be controlled, just another company. So then the employee,

when the legislation was initially brought in, it was only allowed for people who worked on a full time basis. I’m obviously that denying each Stephen, who was he to participate in a scheme to a huge court of individuals and society. So again, they’ve ruled back a little based on that and refinance act 2019, and now going to allow people we’re part time to participate if they work these 20 hours a week for the company or a group,

if it’s qualifying group and not less than 75% of their working time has to be divorced. It’s all few people double the shopping. Um, and the, the SME is not the primary employer was, then they will qualify. The officer appointment has to be capable of lasting more than 12 months. It does apply to, um, director is actually spread to the extent they’re not proprietary directors.

Um, they also allow you to satisfy the working time conditions. If you exercise your options within 90 days of leaving the company. And again, that’s the flex commercially on a sheet provide, um, you might have somebody who’s how’d you sleep company and they have to hand back or, um, they can exercise their options within that period. And then they have to hand back their shares and they will be remunerated accordingly.

They will allow you to participate in the scheme if, if in those limited circumstances. Um, and the other thing is that if you become within the relevant periods, more than a 15% shareholders company within that time, so you might have been only 1% shareholder, um, when you’ve got the options. But when you come around to exercising the options, you have to connect to pretty much come married in the meantime,

as love happens in the workplace. And if together you, more than 15% of the company, then when you exercise, you don’t qualify, even though you might’ve made all those conditions. In the meantime, the amount then the other limiting factor is the amount of, sorry, the amount or the value of shares that can be granted under any, either to the employee themselves or earned the scheme and told to us.

So there’s this parameters for an employee. So the kind of sketch share options worth more than a hundred Tyson’s in any one tax here, they have a lifetime limit of 300,000. And in the year that they were granted, um, the cap given options worth more than a hundred percent of their actual wood emoluments. So how’s the most limiting factor really because these people would have probably taken relatively low salaries,

um, as a result of being able to participate in the share option scheme, or, I mean, you knew of us. So, you know, if they’ve taken a lower salary than they would have been entitled to it because of their qualifications that they’re experienced, and they’re prepared to come on board and go on this journey with the company, the value of their monuments and the value of their share options and easily the emissions by cost that salaries at that time.

So the options themselves, same in terms of, if you exercise your option, you have to subscribe for ordinary, fully paid shares in the company. You can’t define any preferential rights to dividends as assets and pointing up rejection rights, that kind of thing, the option price of the data is Bryant. Um, can’t be less than the market value of the shares at that date of grant.

So if the market value of the shares, when you start to participation, a scheme is when you Euro and do you only have to pay a penny when you exercise your options, it will not qualify for Keith because you need to be at least one year or whatever the market was at the dayshift Bryant of the options. Um, and as well as there needs to be a written agreement setting knows all the details of the scheme as well,

but that would be standard fare. Anyway, with any share option scheme that’s implemented or are designed by a company, um, the options, the comfiest size within 12 months of grants and less, you know, things like you pass away or this, the general law for me company and the can’t be more than 10 years and the options have to be granted for born defeated commercial practices.

So I’ve gone through some of the main finance act changes. And another big one was the old rules that shares had to be new shares and thought was reading them commercially, because what happens is if somebody leaves, then they have to hand their shares back. And then those shares are catching and Charles to be DeVito on the East, up to the next person who faces them.

And if the Keith games didn’t apply to existing shares, the new person who’s attracted him is not going to qualify when they subscribe to those shares. So we have an extension I to existing shares in limited circumstances, but finance 2019 routes are changes. We are still reaching for commencement Georgia on those because of obviously I’m getting state and the issues in relations to getting government formation,

as well as to a couple of today’s. Um, so I have an example here, and you can work to that, but basically we’ve got a situation where somebody found a modest salary of four to Tizen. Um, they’ve been granted the opportunity to get more shares in their company and it’s market value of the data clients per share. So she has to be at least 10,000 jurors when she exercises her option in future.

Um, so she exercises her option in year three. She pays for her shares and they’re worth the Hunter packets. And she only has to pay 10,000. So she’s a BIK there of 90 times. And normally that would be subject to 52% tax. And in this instance is exempt from tax until she actually goes to, um, sell the, so the shares.

So she says the and she paid cop gains tax on a hundred thousand minus the 10 person exercise price that she had to pay. So we watch is doing this, she’s paying 3% CGC instead of 52% income tax on that 90,000, which is a tax saving of over 17. And I suppose the, the, the, you know, that the nuances are,

and there in terms of company provided architecture and services. So that’s a professional service. So an architect or a limited company won’t qualify for keep, if the market value of share shares two euros, when the option price is one year with the date of grant, that’s not going to quantify. Um, if the lady’s salary is 40,000 and she’s being given an option to acquire 50,000 euros worth of shares that won’t qualify for keep because it’s more than her remuneration.

Um, if because of market conditions and the way the value of the shares has gone, she ends up owning more than 15% of the company. Or if, for example, she Mary, somebody at the company and she exercises her options to pay for the honeymoon. Um, unfortunately that’s going to deny her, uh, the, the tax benefits of the tax extension,

if she has for the need for a longer period of time, I’ve been quad. If there’s just an administrative or some of these kind of maternity leave or something like that. And they miss one March deadline, but the company has to report back to revenue. And it’s a couple of days late, um, technically that disqualifies the entire scheme for everybody in respect of options,

exercise the year before. And so I suppose the main thing really is valuation and then the liquidity. So we want a situation where it’s fine to get my option on, to buy my shares, but how am I really going to turn that into money? And I’m not working for a multinational that I’m working for an SME. So we’ve been asking, I suppose,

to try to finance for quite some time, maybe to bring the scheme up to date and allow for example of CGT treatment on a buyback. So as you probably know, a buyback of shares, normally results in an income tax charge, if the distribution for tax purposes, if you’ve heard of the shares for a period of five years. But when I exercise my option,

my five year periods when we commenced, this is that point when they get the shares. So we’re hopeful. And certainly we’re looking for CGT treatment to those in limited circumstances where somebody acquire shares on foot of a qualifying keep scheme, Sorry, I just got in there. So just Justin, um, let’s say even the restricted share scheme, a lot of times,

as you said, the employee E might have a small percentage of shares, you know, in a normal job way back in the CGT rules, right? And saying, you know, you have to meet the trade benefit tests. And usually revenue might come back with such a small holding. We can’t give an opinion. Is there a special rules for types that type of game,

let’s say a restricted shares game hunt employee holds whatever 2% in the company and they buy it back, assuming that it hold it for five years. Mmm. That’s a small percentage. It’s double revenue allow any concessions for the fact that that’s a very small percentage shareholding in the company, such that they get the CGT treatment. Well, I suppose the trade benefit test is that I’ve met distillation,

but the, Mmm. I suppose the rulings on those come from revenue. And it’s a very subjective thing. So with anything you need to show that it’s for the benefit of the trades that this person has taken out. And if you can meet those safe Harbor, you know, they updated their, their manual in relation to that as Tupac, they will accept just as being a benefit to the trades.

And it’s normally where you’re trying to give it to a sticky person or something like that. They don’t specifically go into the detail of, you know, if, if it’s under a Nissan or something like that at all, that’s not provided for, um, you’d have to make a separate application, but they will put ’em then know. But the other thing they’re saying is we don’t want you to come into a sippy for treatment for test rulings.

Like you only come to us for trade benefit rulings, if you think there’s a problem. I mean, if you think it doesn’t qualify and you tell us why you think so, unfortunately, um, you need to, sorry. I’m just, my time is going off there. You need, I’m not, I’m not hoping. You’re sorry. Sorry.

Yeah, no, no, no, it’s fine. Um, I just started, especially, especially at a time right there for my son, so I don’t drive a shot, but, um, no treat benefit test is subjective. Unfortunately I’m revenue’s position on a turtle thing stations and rushing to my knowledge. So like for those employees, you’re kind of waiting on an external sale for certain you get CGT potentially in those cases.

Yep. Yeah. I mean, I mean, it doesn’t either. So for example, they brought in the change to section one, three, five, whereby you might set up an SPV to buy the shares. If you don’t want to put down the route of share, buy back and potentially that’s going to be treated as the distribution of it, because section one,

three, five doesn’t have a tests. So like there’s a lot of uncertainty in relation to that one. Mmm. Okay. So we will now just going to go through another few prevalent forums, but I have seen them in practice in terms of choices that are available to employers when they’re designing their employee share ownership structures. So the next one is product code rules are flowering chairs.

And basically you’re basically given, um, as an employee, you’re given a share that square upfront. So there’s no voting rights can’t be sold. Um, you know, you’re, you’re behind everybody is if it doesn’t make the opportunity or whatever the case may be. So the market value is very, very low. So that means the BIK is going to be not exist to treat you if that’s the case. the whole point of these is normally that it’s aligned with performance management and motivating and incentivizing employees is,

as you’re saying, look, it’s worth nothing now. But if you achieve the following my stools, and if the company also achieved these milestones and our goals are aligned, whether they, the restrictions, um, and the lack of rights attaching to your share would fall away. And as a result of that thing, you will received save proceeds, or,

you know, you’d be able to participate along with the rest of us if it gives them the opportunity to sell the shares. So, because you’ve got the shares up front and you’re paying tax on the upfront, albeit of tiny amount, if anything, because there was nothing thing on a future, say you’re paying capital gains tax and Mmm, as a result of that,

they’re very, very tax efficient. So the hardest part of these kinds of schemes is defining report or the milestones, because it’s a very biscuit book scheme because it has to be designed with the employer in mind with the company’s business in mind, with their kinds of the future. And then what is the employee bringing to the rule of the justifying this, this flowering.

And that’s what makes them look more complications on a bit more expensive to implement, because there’s a lot of consultation and in developing what those hurdles are that they need to meet, they do exist. They do exist in the right circumstances. And then, like I say, there’s a few other ones saying you come across terminology like restricted stock units, which are basically,

they’re not sharing anything books. Um, if, if companies, so are, my students were achieved within, you’ve got a shareholding in this, are you a, a portion of the, um, to say it’s proceeds as well? Or they’re there they’re an American concept really? Because they had their, they are like a unit or they are like a shareholding,

but they’re different from the stock units that we would see ourselves. And then Phantom shares are, it’s like you’re tracking performance of the company. So it’s basically a profit share. You never really become an actual shareholder of the company, but if the company is sold, well, then you get X percent the same as if you had been shareholder, when you’ve got payments like that,

you’re going to paint P E um, and you have to operate Puye as the employer. And you’re going to have periods that employers pirate period side, because they’re not actually per se, they’re just cash payments that are linked to two shares or units in the company. Okay. So why would you choose one of the other, why would you get shares with club I’m supposed to,

you would do that square and you want to get tactical efficiency. I’m fighting with the share. You’re getting up front to very low, where you want to lock somebody in for a certain point in time, but you want to get capital gains tax treatment on exit where you want to really lock somebody in. So giving them, or downloading a carriage in front of them,

that you can get a share option in three years time. It’s just not going to be enough to get that person in. You might give them shares upfront, would you would lock in lots of restrictions that they can get value for them for a certain period of time. You get a share option scheme. For example, if the employer didn’t want to fund the cash flow for the PAE,

or if, um, you wanted to see how this person works out, and if they really don’t perform, then you can just get rid of them really, without them physically becoming a shareholder, the keep scheme on the share option scheme, we would normally Mardi them together that money. If you’re going to do a share option scheme designers with keep in mind,

but we can’t guarantee it would apply because we won’t know that until the shares are X or the share options are exercised, you would often see do through both, go down the route for share option scheme. You might as well have to sign this for keep and hope, but you will get tax efficiency when the shares are, when the options are exercised and growth shares,

where you want to develop a very bespoke scheme, maybe for only one or two people. So it’s not something that you’re going to widen out to a larger courts within New York, and then, or is he using Phantom shares? You’re you basically inherit those because you’re part of a bigger global group and they’re imposing that on you. So it’s so funny, then the Beekley shoot ended as a conscience.

You know what I mean? We’re asked how to value a company and you know, what you would do is you would take the market value of the company and you would use your normal methodologies in relation to that, I’m going to give a link in the final slide to thread, to revenues, view the world in terms of when you would use particular methodology at a different point in time or in different contexts,

whether it’s, you know, dividends or earnings basis or assets basis, that kind of thing. And then you would pull that back and you go with these shares, don’t have any voting rights. So we’ve love the shop for that. Um, there’s a lack of liquidity there. You can only, it’s not a public company. So, you know,

luckily quiddity obviously impacts and the value to me of how am I going to sell these shares? Where is the company in the stage of its life cycles? So is a startup, or is a free tools to an exit opportunity. Um, and then the NRC interests. I mean, like I said, an individual who gets shares on share ups and schemers share theme like this,

you don’t have to pick up 1% of the business very, very well. So obviously, you know, you’re at the mercy of everybody edits in terms of decision making and that’s a lower valued share. Again, you already talked about the cognitive disposals somewhere from 10 to 60%, depending on how long the period of restriction is applied. And the last thing then is forfeiture.

Forfeiture basically means that you get your shares today. Quote, if you leave the company within a certain period of time, you have to forfeit them and you have to hand them back. So what the rules say is that you’re taxed on the value share is the team, get them subject to all those discounts we already went through and you don’t get a discount for the fact that you might have to have them back in future.

But what happens is that if you do end up forfeiting them and you have to hand them back and you never got any value for them, but you end up having this big BIK backwards, or you’ve got them at hand you back, your BIK tax, as long as certain conditions are missed. So in terms of valuing shares, just an excerpt tier from the revenue guidelines in relation to that is the value of a shareholding in an outpost company,

depends on manufacturers. So they look at the business sector in the industry in which you operate out of the net assets of the business and Optum with tech companies, they do, they don’t have any assets. You know, it’s really about the IP. Um, and, and future values that for the profitability of the business, which game is interesting in the context of maybe an R and D company or a med tech company,

it was never ever going to make profits. They’re just going to spend all the money with the hope that a bigger clear multinational would come in and buy the most shareholder level. And they look at the future prospects of the company in the marketplace. Um, they save us spending valuing the shares companies should use evaluation methods, which complies with Redfin’s accounting standards.

So I’m sure all today and think won’t give an opinion on valuations. I suppose, that’s our problem. Like, you know, we at least like to have certainty. We like to be able to advise company lockers. You know, if you, if you operate within these parameters and you’re consistent in that approach, every time you issue a share or you few issue share options then on balance for,

and you would agree with it, it would be nice to get that rubber stamp from revenue, but they’re not, unfortunately happened to have some links. There’s some heads for resources. Um, the filing shares in private companies, it’s, it’s under the CAC manual, but I would use it on a regular basis and guiding myself, I’m finding shares in a private company as to what’s acceptable,

or certainly for Brittany would look at in different contests. And then the revenue shares schemes manual release on the revenue website is when they’ve broken it down into chapter by chapter, depending on the different types of shares themes that are there. I would say, you know, there’s several that I haven’t come into to say, like you’ve approved profit sharing schemes and university Hawaii and Aesop’s and all that.

And to be honest, they’re either designed for all your employees, a very large workforce and very expensive. I haven’t seen one implemented in a long time and some of are actually up to date as well. So it’s, it’s why we haven’t covered today. Um, the other thing is just, they haven’t updated the manual yet to reflect the finance act.

There’s 19 changes. So just be careful there, if you’re implementing a keeps theme and you’re using the birth of your manual as, as your roadmap for what are the conditions, um, don’t do that, certainly don’t do that. The manual hasn’t been updated to reflect the new, and it hasn’t been reflected because the legislation hasn’t been enough just because we’re still waiting from the stereo in Georgia.

So it’s, let’s just to pull it all together, shear schemes they’re there and they definitely need to be looked at. And they’re definitely, um, I’m a very good, I’m more prevalent. We offer moderation employees in today’s day and age, a rule of thumb you have to pay the employer has to fund the Poe on everything except share options. Restricted shares have the least amount of tax because they,

you know, they’re given upfront as a low value in the expectation of the company was significantly rise and find you over time. But there’s a lot of commercial issues associated with the fact that you now have a new shareholder and it’s going to be hard to get rid of them. If things don’t work, share options on the other hand, have the most amount of tax,

but commercially you don’t have to fund the cash for the last, the employer items. They’re easier to, um, to get rid of obviously, or to, to get back from an employee who’s not performing. And the keep scheme thing is a twist on Bashford buy. You can have a share option scheme. That’s very tax efficient. And as a result of that,

then have the commercial benefits of not having to issue those upfront, but it’s very difficult to satisfy all the conditions and they’ve to be looked at through the exercise period. So if you’re issuing share options or shares every so often you have to go back and check all the numbers, it’s do your evaluations. And it’s a huge amount of record keeping and reporting obligations.

So hopefully that gives you a whistle stop tour of share schemes as we would see them in this day and age. Um, I’m happy to take any questions, cause I’m not sure if any have come in yet, John, if you want to throw them up too much. Yeah. So I suppose want to hear, um, in relation to the keep scheme kind of valuation or share option being granted,

the employee be discounted as it would be a minority interest can you discount the value by say 60%? Sorry. Can you just, just bear with me, I’m just trying to get this, I think, like I said now, I’m not, So frankly, in a nutshell, I just wanted to break that up. Sorry, John, could you repeat that?

Sorry. Yeah. And so you have a keyed scheme under just asking him the valuation of the share options, options, being granted to the employee, be discounted as it will be a minority discount. Can you discount the, by the market value by say 60%? Yeah, this is, this is the thing, like, it’s really unclear how we’re supposed to value.

I mean, we value shares and you know, we’ve, we’ve all different methodologies who do that. And we would take Munarriz, she introduced shutters kinds and all that kind of thing, but the legislation strangely says we’ve devalued the share option. So I would anticipate I would value the shares as if I was to get them. I would apply my Minari to just kind of,

I would just add a further, just kind of to reflect the fact that these are mirrored, the options. Like I don’t have the shares yet, and it’s going to be a long time before I get them. But is there, uh, clear rates do wish? No, just reffing. You have safe Harbor provisions. No. Is there a spreadsheet out there that we’re all using?

No, unfortunately not. No. And I suppose you think just from an accounts perspective, well, did he uses a black and scores modern or a Monte Carlo and there they are. They’re taught that the best of times, uh, you know, from that perspective. Yeah. And that’s what we’ve been saying, you know, it’s like wrecking your community.

Yeah. Give us a short sense that if we do these, we’re valuing the lunch or gap or inter efforts or whatever weight that were doing some generally accepted principles, et cetera, you know, they’re fine for, for everybody else’s purposes. But then if we use the same methodology and we’re consistent in our use of us, we accept that. So they’re the kinds of things that we’re trying to get assurance on,

but it’s not your forthcoming. Yeah. Yeah. Um, just to, I suppose some other questions then, can you, can you make some match? Let’s say I grow chair with a clog scheme. Yeah. Yeah. Um, so you can mix and match any of them. So for the mission of growth share is a sheriff up front. Um,

if you, in your shareholders agreements wants to annotate in another layer to say, when you can send that share for a particular period of time, then you can do that. But in saying that, I mean, if you have a growth share and it’s key issues up front, but it’s not worth anything know having a restriction on us is, um,

it’s visual TT, but you might say that once the share has blossomed, but then you might have further restrictive periods. In relation to that, what I would say is that you have to align like remembered that this is to motivate the person and it has to be practical. So there’s no point saying to somebody that I give you a share today, and if you do what you’re supposed to do within three years,

um, then you know, this is going to happen. But if you impose another three year, six year restrictive period for, and they don’t what they were supposed to do within the first three. And why would you penalize them? Or why would you ID him that additional layer? So when you’re designing it, you really need to be very clear approach.

Who are you going to give it to? What periods are they important to the company and pop mine stone, do they need to achieve because they have to keep their eye on the crisis level and the two periods, the lines. Yeah. So I suppose just a God share, like let’s say, you know, consisting owners locking their value at the date of today.

And then the other value is shared. And what proportions there. I noticed some schools are taught that, say that that data evaluation is zero because it was sold in the morning. It will be worthless. There’s other people in the schools are taught that say, well, actually there is a certain amount of value in here. There’s a whole value structure be so valuation put on those shares.

What is your view on us? I think I would look at that in a case by case basis. Um, see the reason being is ruled shares scheme is a really bespoke scheme. So it’s very subjective to the company, to the sector. They’re working in the likelihood, you know, how achievable are the hurdles? Like if they’re kind of easy,

what then you’re kind of going, look, this isn’t tricky, serious at all. This isn’t a girl chair, you know? So it’s such a bespoke scheme, the valuation, et cetera, would also have to be subjective as that. Yeah. And just some other ones then there’s a, so let’s say some people say, Oh, look what this POA parasite.

Mmm. Like I am under share holder. I know Tommy he’s worked with me for 10, 15 years. Nope. I don’t want to get into a POA pier. So I prefer to transfer my shares partially to him. I might get relief for her, Whatever tax relief had his, um, he had paid his Casper overall. It’s less of a tax and the POA PRS.

Is there any reason to step here or it could be imposed in those cases? That’s a great question. So if you look at section one, two eight PhDs with, um, shares in your employer company, generally it basically says that if you guess share or a share option in your entire company, as a result of your association with the company in that role,

then the tax that you’re going to pay on that is going to be income tax. And, you know, obviously it’s through the Puye system to the extent that it’s not the share option. So the question of VAT actually falls away because you have effectively provided consideration because you’ve satisfied your employment juices as a result of which you have an opportunity to get shows when you require your company at a descent professional thing.

Um, so if I go often to employees in the company, or if they weren’t giving me a Gordon handshake to try and attract me on some, he just transferred his shares. To me, that’s a gift. But if there’s no way I would have gotten those shares, but for the fact that I am, or I will become an employee of the company,

we’re talking income tax all day long. Yeah. I suppose it is subjective in that, I suppose, as a husband and wife. Okay. So it wouldn’t, it’d be, it wouldn’t matter anyway, because you would say it’s just my decision, but sometimes you could have known the person, but there’s a big risk there. If you did transfer the shares and an not husband and wife,

they will impose income tax to that. Incapax estimate Poe PSI. Um, that would be 2:00 PM. Yep. Yeah. Um, I noticed as a result of that, if you’re going to do that, because those risks associated, you’re actually better off just issuing new shares because at least you won’t CGT side of things or the STEM juicy side of things to contend with,

But you’d have to pay them then would you even if you, if in that case, yep. Yep. So the transfer, or if you transfer shares with a CGT and then the person receiving the existing shares will have stabbed UC, or if there’s none of that, if you have a fresh issue of shares and there’s no transfer of value because you know,

the value shifting, we were still kicking because 13 to have page consideration for the series. Yeah. Just convertible chairs are sometimes ones that need to be worried about in those particular cases. Um, let’s say a share that you’re given to employ with no race, no rights. Mmm. Do you have any writers to get, they get money equal to percentage to hold,

um, on his future sale? Dr. David, is that a convertible chair or is that a shared rights from the outset your tank? That’s fine. Mmm. I’d have to look at us. I’d have to look vertically. Sherry’s are very, very clearly defined within the legislation and if the conversation right, and then, well, it depends on whether there’s an ad to you,

avoidance motivation or an option because of that, you know, particularly for growth shares, you know, there’s a fine balance between is a growth share zero value, or is it a convertible security provide those provisions actually kicking on everything goes, everything drives from, you know, the shareholder’s agreement and what happens. And obviously the terms of the share documents. It says the share scheme.

Yeah. Thank you very much. Thanks very much for that presentation, as you said, he’s very typical of this point in time. COVID-19 um, so, you know, on the interest, I think your, your details are on the presentation. You can contact yourself, I suppose, that that ends our presentation. I’m conscious, we’re over five minutes over,

I suppose. You know, it’s always good to have some questions, not just because I often find yup. People are or not wanting to ask questions, but are thinking the same question at that point in time. Mmm. So, thanks again. So I suppose that, that interrupts up today. Um, so this is session two of AIDS and the OSHA counting and text someone.

I would probably more common over the next two weeks. So if you liked today’s sessions or you’d like to upgrade your existing Mmm. Two additional CPD sessions, there’s a link in the taskforce there in your, on your, on your screens and it continues and, and choose it it’s Mmm Mmm. The technical session kicks off there at 11 o’clock. So thanks again.

I would just like, there’s a perception that employee share schemes are a legal issue and they’re not there all day long, the tax thing. So The lawyers might design them and put terminology around them. But it’s very much about understanding what’s the client trying to achieve here? Why are they even doing this? Because equity is so precious, why would you give it away in the first place?

And if you’re going to do is you need toxifies at the very outset to design the right scheme for you. So you know what you’re getting into for the next few years, because your fund by the terms of that scheme after that, so anyone who’s doing it, they just assume on handed over to the lawyers and they put it into a document for me,

if it’s a tax question. So yeah, I just like, so even for, you know, the talk schemes where you’re talking about that, like there’s a chess scheme there that is, are just listed, usually involved in that side of things or what ways It’d be part of it. Like any of these schemes they’re normally set up upfront before you even know who’s going to come in to the funding round.

And it’s their thing, you know, just to have that process, to be able to hand it over as people come on board. So the design period is the most important period because once it’s there, they shouldn’t be coming back to us. Unless obviously something like keep has changed and you know, there’s a better tax way of doing a shirt or whatever the case may be like,

I’ve, I’ve designed schemes for people knowing that Keith was maybe coming and they say, no, we really need to get this guy on board. We’re happy to go this way, even though keep he’s going to come in. And it might be more tax efficient, but we can wait to January. Yeah, Yeah. Guys,