Your company may use a nominee set up to hold shares when your employees exercise their options. In this scenario, when your employee exercises their options to shares, the shares are issued to the nominee, to hold the shares on behalf of the employee (the employee is the beneficiary).
If your nominee share register is hosted on Orchestra (recommended) then there are two share transactions to execute:
- From the option grant, exercise the options to a share transaction, issuing the shares to the nominee company.
- Issue the shares to the option holder (now becoming a shareholder) in your nominee share register.
How to exercise options to be held on trust by your nominee
Example:
Anna Skegg holds options in Conductr Limited.
Anna Skegg has notified the company that she would like to exercise her vested options.
Anna Skegg's shares will be held by Conductr Nominees Limited.
Anna has signed a nominee deed and paid the exercise price to the company.
The company administrator will enter two share transactions:
- In their company register profile called 'Conductr Limited'.
- In their nominee register profile called 'Conductr Limited via Conductr Nominees Limited'.
How to execute the exercise of options (two transactions)
In the profile for Conductr Limited - exercise the options from Anna Skegg's option grant. The 'Exercise options' button is near the 'Grant History'.
Transaction 1
Create a share transaction. The 'New shareholder (to)' will default to the option holder name, however, you can select the nominee from your shareholder dropdown list or 'Create new shareholder' if this is the first time that the nominee will hold shares in the company.
Issue the shares to Conductr Nominees Limited. Add a share transaction note: ESOP exercise for Anna Skegg. The exercise notice can be stored as a document on the share transaction for ease of reference.
Transaction 2
In the profile for Conductr Limited via Conductr Nominees Limited - issue shares to Anna Skegg. If Anna Skegg is a new shareholder, you will need to click 'Create new shareholder', or select from your shareholder dropdown list. The exercise notice can be stored as a document on the share transaction for ease of reference.
Note: If you create the new shareholder Anna Skegg (in Conductr Limited via Conductr Nominees Limited) using the same name and email address as per her options entity (in Conductr Limited), Orchestra will 'entity match' for Anna Skegg and will not create a new entity.
Anna will be able to view her options (if they're < 100% exercised) and her shareholding from the same Orchestra login. She will receive an email notification for the exercising of the options, and the issuing of the shares.
Final Check
You can check that your nominee company register is aligned with your company register by making sure that the nominee shareholder (Conductr Nominees Limited) holds the same number of shares in the company profile (Conductr Limited) as the total number of shares in the nominee company register (Conductr Limited via Conductr Nominees Limited).