Digital equity management: the best way to share ownership

Last updated: 1 October 2024. 

The founders we talk to want to share equity with some or all of their team. They agree that it’s the right way to go, that everyone benefits when they have a piece of the pie, a slice of the action.

But for one reason or another, they haven’t gotten around to setting up a share scheme just yet. Or they're put off by a past experience - when the process was costly, complicated and time-consuming.

Staying afloat in a sea of paperwork and chasing lawyers/accountants for answers while simultaneously managing a burgeoning startup is no mean feat. 

And many who single-handedly attempted it in the past, later discovered that their scheme was never compliant. But that was then, and this is now...

Why digital equity management is the way to go

Vestd has transformed processes to make equity management easier. Here's how:

1. No need for lawyers and accountants

Typically in the past, to set up a share option scheme like EMI, a founder would enlist the help of either a lawyer or an accountant (in-house or third party). Some lawyers and accountancy firms offer equity management services, and some don’t. That’s one obstacle.

Designing and managing a share scheme requires a combination of legal documentation and tax considerations, so the whole process actually sits somewhere between the two professions, just to add to the confusion.

Naturally, this means a lot of conversations back and forth plus time and money spent. And those fees can spiral out of control. 

Vestd's specialist in-house team can take care of valuations and provide industry-standard legal document templates for non-complex companies.

If your scheme or the company's structure is particularly complex, you may need a lawyer's support.

For the record, our team, content and app can help you make informed decisions. However, any guidance and support should not be considered as 'legal, tax or financial advice.'

2. Digital documents electronically accepted

In the past, a lot of the pain of setting up a share scheme was in the paperwork.

Every share scheme is different, but in the case of Enterprise Management Incentives, resolution agreements, option agreements, valuations and annual statements are required (among other things).

Check out our free EMI share options scheme checklist for more info.

So, those who wished to share equity would have to distribute, collect and collate all of that documentation. And every shareholder needs a signed copy. It's a time-consuming task with a lot of potential for human error and misplaced pieces of paper.

Digital equity management is a modern solution to a bureaucratic nightmare. 

Download our buyer's guide to compare the top equity management platforms in the UK and discover the right one for you.

Agreements are auto-generated in minutes, recipients can accept them electronically and receive their share certificates, and admins can submit statements or update HMRC or Companies House through the platform.

3. Design the scheme online

Designing a share or option scheme has been daunting in the past. Business owners need to decide how much of their company equity they should set aside, how many shares each recipient should receive, what the vesting schedule should look like and consider the impact of dilution.

So why not manage all of these conditions on a guided digital platform where it’s miles easier to visualise, manage and monitor it all? 

Vestd is designed with compliance in mind. The platform accounts for the number of shares (or options) allocated to stop admins from exceeding those limits. The platform also prevents the submission of out-of-date valuations and anything unauthorised being issued.

Better still, ours is the only platform with complete Companies House integration to make the whole process more straightforward. 

It will also prompt company admins to action important tasks, such as annual submissions to HMRC, and it will keep track of the necessary data you need to submit.

A share scheme set up, designed and managed digitally, is a lot less hassle and stands a better chance of remaining compliant.

Existing schemes can be digitised too. If you have already enlisted the services of a lawyer or accountant, fear not, as you can upload existing documentation to the platform for safekeeping.

You can grant key advisors access too, to manage the scheme via Vestd.

4. Better visibility

In the not-too-distant past, shareholders would place a copy of their agreement or share certificate in a drawer and forget about it until an exit event. 

That's another thing that's dramatically different about a digitised scheme - visibility.

Recipients can access their own shareholder portal with a dashboard that displays a clear, visual representation of their shares as they vest.

They can even add a projected share price to understand the future value of those shares. No more out of sight, out of mind. With a digital platform, it’s easier to see and better understand what the pot is - and might be - worth. 

Business owners can incentivise teams with their employee share scheme better if they can visualise their options.

And don't worry, sensitive information doesn't have to be disclosed. The Vestd dashboard can display information on a need-to-know basis.

The future of share schemes

Sharing ownership doesn’t have to be a hassle like it was a decade ago!

With Vestd, it’s much easier to manage popular employee share schemes like EMI.

Clever functions like auto-generated documents and digital dashboards mean that the whole process is a lot smoother. Vestd offers guidance from start to finish and five-star support.

Let us help you to share equity, talk to an expert today.