As from January 2021 Finnish companies will have new possibilities to issue shares to their employees. Shares can be issued at a subscription price below fair value. In practice, the subscription price under the new regime can be the equity value of the shares. No taxable income is triggered at the time of the subscription. A future sale of shares will be taxed as capital gain.
The new regime requires that a majority of the company’s employees have a possibility to participate in the share issue. The number of shares that each employee is entitled to subscribe shall be proportional to such employee’s gross salary and other forms of compensation. The regime also applies to CEOs but not to outside board members who are not employed by the company.
The new regime is intended to enter into force on 1 January 2021. At the same time, a new regime on stock options becomes applicable, allowing the use of penny options. Together these two regimes provide powerful tools in respect of incentivizing employees with equity instruments.
For more information, please contact Sebastian Kellas.