GEO INSIGHTS

RA Information Systems has transitioned to an employee-owned business through an Employee Ownership Trust (EOT), transferring 100% of the company's shares to the trust. This move is aimed at preserving the company's independence, recognizing the contributions of its employees, and maintaining the founders' legacy and the company's culture. The founding family will remain actively involved, ensuring stability, while the new ownership structure aligns with the company's long-term vision and commitment to its employees and clients.

Revolut, now Europe's most valuable private tech company with a $45 billion valuation, recently conducted a secondary share sale, enabling its employees to gain $500 million in liquidity. The company, which has grown rapidly with $2.2 billion in 2023 revenue and securing banking licenses in Mexico and the UK, is predicting significant growth in 2024, including an increase to 50 million users. Speculation is rising about a possible stock market debut, with Revolut potentially considering a New York listing.

JTC has announced its proposed acquisition of Buck UK's and European Share Plan Administration and Trustee businesses from Arthur J. Gallagher & Co., pending regulatory approvals. This acquisition is expected to enhance JTC's Employer Solutions platform by adding a team of 16 professionals and a portfolio of high-quality clients. Both companies emphasized the importance of cultural alignment and shared values in finalizing the deal, with JTC's CEO highlighting the synergy with their long-standing commitment to shared ownership.

Startups often offer a mix of equity compensation and salary to attract and retain talent, with the balance dependent on the company's financial resources and the competitive market landscape. In the UK, the current high inflation and tight labor market have pushed average wages up by 13% since early 2022, making it crucial for startups to understand salary ranges and negotiate effectively. Equity compensation, while beneficial for startups in managing budgets and motivating employees, comes with complexities and risks that both employers and employees need to carefully consider.

Boku Inc. will hold an Extraordinary General Meeting (EGM) on 11 September 2024 to seek shareholder approval for a new executive share scheme. The New Plan, designed to reward exceptional performance and align executive incentives with company growth, will allocate up to 9,090,858 restricted share units, representing 3% of the company's issued share capital. Awards will vest based on a performance condition tied to share price growth over the next few years, with further details available in the Notice of EGM.

In Estonia, equity awards are generally taxed as fringe benefits at the corporate level, with a combined tax rate of 66.25% on the net benefit received by the employee, increasing to approximately 70.5% from 2025. The taxable event occurs when employees receive the shares, and the taxable value depends on the type of award, such as RSUs or stock options. Tax exemptions are available for equity awards if there is a minimum holding period of three years and the awards are for shares in the employer or its group, with specific reporting requirements for both the employer and employee.

Impact investing, which uses capital for social benefit, and employee ownership, particularly through ESOPs, have been shown to significantly benefit workers, especially people of color, by building wealth. While the amount of impact investment in employee ownership is growing, it remains a small fraction of the total capital invested for social impact, with only $3.8 billion allocated to employee ownership funds. The report by Curt Lyon and Julie Menter suggests that to deepen the impact, investors should commit early capital, support fund managers of color, and integrate investment strategies with broader community initiatives.

A recent Sifted survey reveals that over a quarter of European startup employees see their stock options as a stepping stone to starting their own businesses, reflecting growing entrepreneurial optimism. However, about one-third are doubtful about the financial returns of their options, and many lack understanding of their true value, with over 40% unaware of their worth and nearly 45% not receiving guidance on how to exercise them. Effective communication of stock option benefits and proper scheme management are crucial for maximizing their potential as a tool for talent attraction and retention.

A new law (Law No. 7524), effective 2 August 2024, exempts from income tax the value of shares that employees of technology startups receive for free or at a discount, up to the amount of their annual gross salary. To qualify, the technology startup must be approved by the Ministry of Industry and Technology, and employers are responsible for any exempted tax if employees sell the shares within 12 years, with tax liability decreasing based on holding periods. This amendment to Article 17 of the Turkish Income Tax Code presents an opportunity for eligible companies to optimize their employee incentive programs while carefully evaluating potential implications with professional guidance.