Legal Updates

A company’s employee stock options pool is not deemed part of the company’s issued capital for calculating holdings in the company

January 6, 2020

A shareholder demanded data from the company, including financial statements, the register of directors and shareholders and salary data of the directors and to convene a general meeting. The company contended that according to the shareholders’ register, when calculating the ESOP pool allocated to the trustee for allocation to employees, the shareholder does not hold 10% of the issued capital of the company.
The Court held that the shareholder is entitled to data but not information on the directors’ salary and is entitled to demand a shareholders' meeting. A shareholder has the right to receive minutes of the general meetings, the register of shareholders and the register of material shareholders, articles of association, financial statements and other documents. A shareholder holding at least 10% of the voting power is entitled to receive data on payments made to each of the directors, but the board of directors may refuse if the request was not made in good faith. Here there is no real reason for demanding to disclose the payments made to the directors and therefore it will not be disclosed, to keep the privacy of the directors. The law states that a shareholder holding 10% of the issued share capital is entitled to require a special shareholders' meeting. Although given the Employee Stock Option Plan pool of options, the shareholder does not hold 10% of the capital, but the options pool, even if issued to a trustee, is not considered part of the issued capital o and therefore the shareholder has more than 10% of the company and is entitled to demand the convening of a general meeting.