The differrence between options & depositary receipts
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Overview of options & depositary receipts
There are quite a few differences and similarities between options and depositary receipts. To help you make a choice, we've listed the most important points below.
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What does it mean?
Options give the right to buy shares in the future.
Certificates of shares are financial instruments issued by a foundation administration office (STAK). This creates a separation between the economic rights (dividend) and the legal rights (voting rights).
How does it work financially for employees?
Stock options allow employees to benefit from an increase in the company's value.
Also, employees only invest when they exercise the options, so they do not lose their investment in case of a decrease in value.
Also, employees only invest when they exercise the options, so they do not lose their investment in case of a decrease in value.
Certificates of shares allow employees to directly benefit from the increase in the company's value.
What about employee engagement?
Employees receive shares only when they exercise the options. Only then do they get voting rights.
With share certificates, employees have voting rights in a foundation that stands between the company and the employee. This means that employees do not have direct influence in the company, but rather it goes through the foundation (STAK).
What about tax implications for the employee?
The difference between the exercise price and the purchase price of the option is taxed as income.
When the employee buys shares below market value, the tax authorities consider the difference as income. Income tax must be paid on this amount.
What are the costs?
This is just a contract. The shares only need to be notarized when exercised.
Setting up and maintaining a foundation is an expensive process for share certificates.
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