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Published on: 3 January 2024

Explanations about STAK

Employee stock ownership is often used as a way to provide financial rewards for employees. And to involve them in the success of the company. There can be several reasons to offer some form of employee participation. Such as engaging talented employees for a longer period of time, boosting performance and productivity or improving employee loyalty. There are several ways to stage employee participation. In this article, I explain the use of a foundation administrative office (“STAK”). A STAK can have more purposes than employee participation, but this article will zoom in on employee participation.

Voting rights and certificates

Before we explain how a STAK works, it is important to know what components a share has. In principle, a share gives the right to vote at the general meeting as well as the right to profit distributions (dividends). This can be deviated from by issuing shares that grant more rights to the holder of those shares. These voting rights and profit rights can also be split from the shares. For example, it is possible to have shares without the profit rights. The profit rights are then issued to other parties. These parties then receive certificates on the shares entitling them to profit rights. The profits are then distributed to the shareholder. Thereafter, the shareholder is obliged to distribute the profits to the certificate holders. The shareholder then retains the voting rights attached to those shares.

STAK in practice: how does it work?

A STAK is a foundation set up to manage shares in a company. Because the STAK will hold shares in the company, it will be able to exercise the voting rights attached to them; the STAK thus has (part of) the control in the company. The board of the STAK is often formed by the same (indirect) board of the company. The profit rights on the shares held by the STAK are then issued (by means of certificates) to the certificate holders.

When an employer wants to bind key employees to his company for a longer period of time, offering certificates to the employees may be a solution. The employee cannot then exercise voting rights, but can claim the dividends that the company pays out to its shareholders. This is because the STAK receives the dividends on its shares and is obliged to distribute them to the holders of depositary receipts. In this way, employees can share in the company’s financial success, but are not directly involved in strategic decisions. In addition, the certificates – like shares – also have a value. When the company grows and achieves financial success, these certificates will also become more valuable. In this way an employee can also enjoy the growth of the company.

The STAK thus works as a kind of intermediary between the employees and the company.

Thus, advantages of the STAK are:

  • Maintain control: if you place shares of a company in a STAK, the board of the STAK retains control over those shares. The certificate holders do not gain control.
  • Continue doing business: if a certificate holder dies or otherwise has to offer the certificates, the board of the STAK can continue to exercise its voting rights as usual. Thus, the company can also continue to do business If a company’s board were to consist of a single director, if that person died, the continuity of the company would be compromised.
  • Withdrawing certificates is easy: It can be agreed that the STAK can withdraw the certificates without requiring the intervention of the notary. This avoids incurring costs each time the certificates are issued/withdrawn. It also saves (sometimes tremendous) time since no notary is needed to revoke the certificates

Some disadvantages are:

  • Cost of incorporation: establishing the STAK is not without cost. Conditions of administration have to be drawn up. Terms of administration are similar to the articles of association of a PLC Also, the STAK must be established by a notary.
  • Rights for certificate holders without meeting rights: the terms and conditions of administration may provide that certificate holders have meeting rights. This means that holders of depositary receipts have the right to attend and speak at the general meeting (of the company).

Certificate holders without meeting rights can therefore in principle not do this but, still have certain rights. They have the right to demand an investigation if certain conditions are met (Article 2:346 paragraph 1 sub b of the Civil Code (“BW”). They also have the right to audit the STAK’s finances (Article 2:396 paragraph 8 jo. paragraph 9 under a of the Civil Code). Finally, they have the right to inspect the books and documents of the company if it is dissolved (Article 2:24 paragraph 4 BW).


Employee participations can be set up in many ways. Thus, one way is through the use of a STAK. This retains control with the existing shareholders and rewards the employees in case of good results of the STAK. However, this has a cost in setting up. All in all, this is a method often used to allow employees to participate in the company. It is very important that all rights of the certificate holders are accurately determined. One way to do this is to avoid difficulties when employees leave, for example.

Do you have plans to set up employee participation? But do not yet know what works best for you or how best to frame it? Or do you have a question regarding your rights as a certificate holder? Then contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.

Articles by Ravinder Sukul

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