Shehata & Partners is pleased to share this guidebook with startups that are interested in scaling their operations and incentivizing their employees. This guidebook offers objective information about employee stock ownership plans (“ESOPs”) in the United States. It explains what an ESOP is, its advantages, conditions, limits, and how to evaluate its feasibility for a startup.
This guidebook is intended for non-American startups that have a C corporation in place or intend to incorporate one. While most ESOP principles work for S and C corporations alike, S corporations have been excluded from the scope of this guidebook due to their incorporation restrictions. Unlike C corporations, S corporations can be owned by individuals only — no venture capital or private equity funds considered — and must be owned by residents or citizens of the United States.
Furthermore, ESOPs covered under this guide should not be confused with their non-U.S. counterparts, as they often have little or nothing to do with the U.S. ESOP. For example, in India, an “ESOP” is an employee stock option plan, while the U.S. ESOP is an employee stock ownership plan. Also, it is worth mentioning that Egyptian law recognizes the possibility of setting up an employee stock ownership and/or option plans by joint-stock companies and limited partnership by shares.
Disclaimer: This guidebook is provided for informational purposes only and does not constitute legal advice. Hence, it does not endorse or discourage the establishment of an ESOP, since the applicability and advantages of an ESOP depend on individual circumstances. For professional legal guidance tailored to your specific situation, please consult our lawyers.
For more information about the ESOP Guidebook, please click on the download button below.
