Introduction
This article will provide a quick overview of a few actions you may be interested in as you begin to handle your company's ownership on the platform. Historically, managing equity involved paper, spreadsheets, fax machines, and even couriers. Fidelity Private Shares helps make the managing of your equity easier.
Click on the links below to be directed to that portion of the article:
- Stock Incentive Plan
- Granting Shares or Options
- Viewing Vesting, Accessing Documents, Acting on Equity
- Repurchasing Stock
- Changing Authorized Shares, Recording Stock Split
- Reporting Tools (Including the Capitalization Table and Stock Ledger)
Stock Incentive Plan
The Stock Incentive Plan (SIP) is a mechanism used to grant company equity to eligible grantees. Our blog post provides a general introduction to what a Stock Incentive Plan is, and why your company might want to set one up. If you are looking for a more in-depth tour of the components that make up a Stock Incentive Plan, see our article here.
If you'd like to create a new Stock Incentive Plan for your company in the platform, you'll want to follow this step-by-step process for setting up your Plan.
Alternatively, if your company already has a plan and you'd like to document an existing Stock Incentive Plan, you can do so in the platform by running the Upload Stock Incentive Plan workflow instead.
Once finished, your company can offer ISO, NQO, and RSA grants using the platform.
Learn more about how setting up a Stock Incentive Plan through the platform can benefit your company.
Granting Shares or Options
Granting ISOs, NQOs, and RSAs to employees, consultants, advisors, and others is fully automated through the platform (if you're unsure about what each equity acronym means, check out our blog post). There are several reasons why you might want to grant equity to different company actors, perhaps the most common of these being the incentive alignment for employees. We also have resources about what the legal process looks like in order to grant equity to your employees, which provides a bird's eye view into the steps of the automated workflow for granting equity.
Using the Grant Shares workflow, you will be able to create a grant with just a few key pieces of information—recipient name, number of shares, and the start date for vesting, if applicable. (We will even give you hints about SIP, IRS, and SEC constraints for your grants.) After the grants have been specified, the platform will generate the necessary resolutions and they will be sent for approval by the Board of Directors.
You can also use your own custom templates for the newly created grants, so that you can track the approval and signature process from beginning to end. This same workflow will allow you to document grants that were created outside of the platform.
Vesting, Documents, And Recipient Equity Actions
Once grants have been issued and approved, recipients can accept their grants in the platform. For the company, this means no danger of lost paperwork. For the grantees, it means full and easy access to their electronic stock certificate and grant-related documents. Every share or option holder in your company will have a heading named My Equity where they can see their vesting status, exercise their options, and even 83(b) filing.
Repurchasing Stock
A robust range of equity transactions can be handled by the platform, including the repurchase of shares from departing employees. The platform can execute the repurchase, via the Termination workflow, or can be used to record repurchase as a standalone action. The changes to equity are immediately reflected in the up-to-date Cap Table and Stock Ledger in your account.
Changing Authorized Shares, Recording Stock Splits, Transferring or Exchanging Stock
The platform makes processes more streamlined and simpler. Updating your company's authorized shares or par value can be done through the platform, and you can follow these steps to capture these updates. If your company undergoes a stock split or reverse split, you can document this change in the platform and easily update all of your issued stock certificates. The platform can also automate stock transfers and stock exchanges from beginning to end.
Capitalization Table and Stock Ledger (and More!)
The equity in a company can take many forms, including founder's stock, employee options, shares reserved or owned by investors, and shares that have yet to be granted. The Capitalization Table represents a thorough accounting of the ownership of the company. The information about the equity in the Cap Table is critical when a financing opportunity arises. It is a key part of any Term Sheet, and its accuracy is paramount as financing negotiations take place.
The Cap Table can be collapsed for a summary view of your company's ownership or, using the tools provided, you can see ownership at a granular level. Drill down to see who owns how many shares of stock, what classes of stock are in play, and what happens to ownership when those classes are converted to common shares. Your Cap Table lets you toggle between views to see who owns what for scenario planning. You can also export the Cap Table to Excel for further analysis.
Since the Cap Table contains sensitive information, only a select few users in your organization should be able to access it. Advanced permission settings allow you to authorize each user's access level and define whether they can only see an overview of the table or manipulate the table directly.
The Stock Ledger is another way to view historical equity transactions. The Stock Ledger links to the related stock certificates and legal documents for each entry.
To check out other equity reports available in the platform, see here.
Fidelity provides cap table management and other administrative services to private companies and their equity compensation plans.
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