Different classes of shares in a SIA and the related tax considerations
2 July 2026
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Employee Incentive Programs
Attracting and retaining highly qualified employees is one of the most pressing challenges facing businesses today. Competition for highly qualified specialists is intensifying, and traditional compensation models frequently fail to provide sufficient long-term motivation.
An increasing number of companies are therefore implementing equity-based incentive programmes. In practice, these are most commonly structured through employee stock options or employee shares - enabling employees to participate economically in the growth of the business, while preserving control in the hands of the existing owners.
Types of Employee Equity Participation
Equity-based incentive programmes can be structured in several ways, depending on the company's objectives, capital structure, and employee motivation policy.
01
Employee Stock Options
Employee stock options grant employees the right to acquire shares or equity interests in the company in the future, on pre-agreed terms and typically following a defined vesting period. This approach aligns employee motivation directly with the growth in enterprise value.
02
Employee Shares
Employee shares are a dedicated class of company shares designed for employee incentive purposes. They typically confer rights - such as entitlement to dividends - without diluting the control rights of existing shareholders.
03
Combined Incentive Structures
In certain circumstances, a combined model incorporating both employee stock options and equity interests provides the most effective solution - balancing short-term and long-term motivation.
The Importance of Employee Equity Participation Programmes
Employee equity participation programmes are an effective instrument for aligning employee motivation with the development of the business.
Traditional compensation mechanisms - salary and bonuses - often fail to deliver long-term motivation and are not the most tax-efficient option. Equity participation programmes, by contrast, allow employees to participate directly in the creation of enterprise value and to benefit from its growth, often generating significant tax savings for the company.
Such programmes are particularly common in fast-growing companies, technology businesses, and organisations seeking to attract highly qualified specialists.
Benefits for the Company and Its Employees
Benefits for the Company and Its Employees
For the Company
- ability to attract and retain qualified employees;
- employee interests are aligned with the company's long-term development;
- increased employee engagement in company operations;
- no dilution of existing owners' control rights;
- a competitive incentive model that does not require an immediate increase in cash compensation;
- Highly favourable tax treatment.
For Employees
- opportunity to participate in the growth of enterprise value;
- entitlement to dividends or other economic benefits;
- a stronger sense of belonging and ownership;
- greater motivation to contribute to the company's long-term development and value creation.
Legal and Tax Considerations
The legal and tax framework is critical to the effective design and implementation of an employee equity participation programme.
It is therefore essential to carefully design the programme structure, the terms of equity participation, and the underlying agreements - ensuring both legal clarity and tax efficiency.
How We Support Your Business
How We Support Your Business
We provide legal and tax advisory support for the design and implementation of employee equity participation programmes.
1
Analysis
We assess the company's structure, ownership interests, and the objectives of the incentive programme.
2
Programme Design
We develop the programme model - whether stock options, equity interests, or a combined structure.
3
Legal and Tax Structuring
We ensure that the selected model complies with applicable regulations and is structured in a tax-efficient manner. Where the model is complex, we coordinate it with the competent authorities prior to implementation.
4
Documentation
We prepare all required documentation, including programme rules, agreements, and capital structure change documents. We also handle the submission of all required documents.
5
Employee Communication
We assist the company in explaining the terms and mechanics of the programme to participants clearly and effectively, and support communication with the competent authorities.
6
Ongoing Maintenance
We advise on adjustments to the programme as the company's structure or objectives evolve.
