Netherlands: New rules for trading of non-listed employee stock

January 12, 2010

Employees working in non-listed companies may soon be allowed to trade their employee stock amongst themselves, after the Netherlands Participation Exchange (NPEX) has obtained approval from the Dutch Supervisor (AFM) to expand its on-line trading platform.

It is not uncommon in the Netherlands to allow employees to participate in the capital of the company they work for; to align the interests of employees and owners.  Participation is often arranged though either stock appreciation rights, phantom stock, non-voting shares/depositary receipts, or options.

However, in practice, such participation often fails to achieve its goals, because of one major difficulty: determining the true arms’ length value of the shares of non-listed companies.  On top of that, sale of such stock is usually not easily arranged because of lack of transparency on price, and therefore lack of demand.

The lack of transparency also creates difficulties from a tax perspective, necessitating frequent and difficult discussions with tax authorities on valuation matters and timing of possible awards, vesting, and sales.

The NPEX is hoping to tackle these difficulties by creating a web-based trading platform, open only to accepted buyers, who then can trade amongst themselves.  Effectively, a company will be able to use the platform for employee stock trading, ensuring it remains only within the closed employee circle.

This exchange has been inspired by the Second Market exchange in the USA, where the internal trading of employee stock (for example, trading in Facebook stock) has proven to be a success.

Being accredited by and subject to the supervision of the AFM means the Netherlands governmental regulatory body for financial markets has approved and monitors the NPEX.

For further information or to discuss any of the issues raised, please contact Ton Mertens ( or Peter Bos ( on +31 20 578 5785.

Loyens LoeffCELIA Alliance


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