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8 Tips for Effective Share Scheme Communication

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Devising ways to hire quality staff and boost employee retention can be difficult for startup owners. Nevertheless, an employee share scheme is a program startup owners can implement to offer employees the opportunity to receive shares in the company. These schemes incentivise employees by giving them a stake in the company’s success. However, effective communication with your employees is critical when implementing employee share schemes. This article will take you through 8 tips for effective share scheme communication for your startup.

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1. Provide Clear Documentation

Transparency is critical when communicating share schemes to employees. To facilitate this, you must provide comprehensive documentation that outlines the:

  • terms and conditions of the scheme; and
  • legal obligations associated with participation.

Further, you must ensure that you write all documents in plain language and make the documents easily accessible to prospective participants.

2. Offer Seminars

Conducting seminars for employees to explain the intricacies of the share scheme is an excellent way to ensure effective communication. These sessions should cover the scheme’s: 

  • legal aspects; 
  • tax implications; and 
  • potential risks. 

You should also encourage employees to ask questions and seek independent legal advice.

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3. Address Tax Implications

Share schemes often have tax implications for employees. As such, it is crucial to explain to your employees that they need to seek tax advice applicable to their circumstances. It is often a good idea for the business to have a good general understanding of likely tax consequences for participating employees to give some initial high-level guidance. 

Of course, you should also seek tax advice before implementing any share scheme as it will also have specific reporting obligations to the IRD under the scheme, which your business needs to comply with.

4. Develop a Communication Plan

You should consider developing a detailed communication plan that outlines the timeline and methods for sharing information about the scheme. This plan should consider legal requirements for notifications and disclosures. This communication plan should also leave room for routine updates on the scheme and information sessions for newly eligible participants.

It is essential to understand that employees will have varying levels of understanding and interest in the share scheme. For example, the information requirements will differ between executives, middle management and regular employees. You should tailor your communication to address the specific needs and concerns of different audiences. 

5. Leverage Various Communication Channels

It is also essential that you utilise various communication channels to reach employees. This may include: 

  • email correspondence;
  • company meetings; and 
  • internal communication systems, such as a company intranet. 

Variety in communication channels will ensure messages reach employees effectively. However, you must ensure the information is consistently conveyed across all channels to avoid miscommunication.

6. Encourage Questions and Feedback

You should create an open and supportive environment where employees feel comfortable asking questions and providing feedback about the share scheme. 

You may also wish to consider establishing a dedicated communication channel or point of contact for inquiries related to the scheme. For example, an employee may be responsible for bridging the communication channel between employees and management.

7. Monitor Compliance

You should regularly monitor and assess compliance within your share scheme. This includes tracking the issuance and vesting of shares, as well as ensuring that any changes in the scheme are communicated promptly and in compliance with the law.

Keeping participants informed about the progress and performance of the share scheme is vital. Regular updates can help employees track the value of their shares and stay engaged in the scheme. You should ensure that these updates are provided clearly without room for misunderstanding.

Finally, you must offer access to legal resources or guidance for participants with legal concerns related to the share scheme. This might include referrals to legal professionals with expertise in share schemes to ensure that employees receive accurate legal advice when needed.

Key Takeaways

Effective communication in an employee share scheme is crucial. Effective communication means that companies can engage with their employees and mitigate legal risks associated with share schemes. Some essential tips for effective share scheme communication for your New Zealand business include: 

  • providing clear documentation;
  • offering seminars;
  • addressing tax implications;
  • developing a communication plan;
  • leveraging various communication channels;
  • encouraging questions and feedback;
  • monitoring compliance; and
  • provide legal resources.

If you need assistance developing an effective share scheme communication method for your New Zealand startup, you can contact our experienced startup lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.

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