ESOP and employee equity

Actual equity makes the employee a shareholder with all associated rights — the strongest reward, but also the hardest to revoke. An option grants a right to acquire equity in the future once conditions are met. Phantom shares grant only a monetary entitlement to a share of value or exit proceeds, without entering the ownership structure and with the simplest administration. We recommend most companies start there.

Vesting means participants earn their equity gradually, typically over several years, often with an initial one-year cliff. It protects the company: someone leaving after six months does not take equity intended for a person who was expected to build the business for years.

The plan must address exactly this upfront — distinguishing good leavers (agreed departure, health reasons) and bad leavers (breach of duties, joining a competitor), with consequences ranging from buyback to forfeiture of the unvested portion. Without these rules, every departure becomes a negotiation.

Investors expect an ESOP and generally require one — it is important to establish upfront whose equity funds the plan and how it is diluted. At exit, the plan determines how participants share the proceeds. We coordinate the investment documentation so that everything fits together.

Fundamentally — and the country also matters. In Slovakia, an s.r.o. cannot hold its own business interests as a pool for the plan, the contribution per interest must be at least €750 and it may have no more than 50 shareholders — actual equity is therefore handled through options over shareholders' interests or phantom shares. A joint-stock company has statutory instruments (shares below the issue price, own shares to be transferred within 12 months), but only for employees. A simple joint-stock company has an employee share regime built into the law — up to 20% of share capital, with shares denominated in euro cents. These limits apply to Slovakia. A Czech s.r.o. is subject to different rules, including a minimum contribution of CZK 1; we design a Czech plan under Czech law. In both countries, we assess whether the current legal form can support the plan.

In a Slovak simple joint-stock company, yes — the law expressly includes natural persons operating under a trade or other business authorisation whose work for the company produces intellectual property, typically external developers. In Slovak a.s. and s.r.o. companies, the relevant statutory employee concessions apply only to employees; contractors are accommodated through options over shareholders' equity or phantom shares. In every case, rights to the contractor's output must be contractually resolved.

They depend on the structure and country — taxes and contributions can determine which form is worthwhile. We design the legal structure and discuss tax implications with your tax adviser, with whom we routinely work during the design process.

It depends on the selected structure and number of participants. We confirm the price upfront after the initial consultation — and honour what we agree.