The Ultimate Guide to Stock Options in Swedish Startups

Since January 2018 there are new and more beneficial tax regulations for Swedish startups giving qualified employee stock options (“QESO”, Swedish: kvalificerade personaloptioner) to employees. This is a guide to the new law and how you can create stock options meeting the criteria for lower taxes

First, a summary will give you an overview of the new law and the whole process. Next, different kinds of employee incentive programs will be discussed, followed by a deep-dive into the criteria for lower taxes and how to set up an option pool. We’ll then discuss vesting before finally walking through a step-by-step process: how to implement a stock options program.

If you know the theory already, you can of course just skip to the document template download section.

Note: If you are looking for the “old” way to issue market level warrants (Swedish: marknadsmässiga teckningsoptioner) to employees, or if you are a company outside the scope of the new law’s criteria (see below), you should instead go to the warrant guide for Swedish startups. However, I still recommend you to read this guide as it contains general discussions about setting up employee incentive programs as well.

Disclaimer: This web site and the documents that can be downloaded from here contain general information, which is not advice, and should not be treated as such. The information is provided “as is” without any representations or warranties, expressed or implied.


Following the new legislation in January 2018 regarding reduced taxes on qualified employee stock options (QESO), most Swedish early-stage companies are now able to give stock options to key employees in a tax-efficient way.

In short, if the company and the employee meet certain criteria, the company can give stock options to the employee for free, which gives the employee the right (but not the obligation) to purchase shares or warrants in the company, or in a company within the same company group, for a fixed price (“strike price”, typically almost zero) at a fixed date some years into the future (“expiration date”, 3-10 years).

The future value increase of the shares (or warrants) are only taxed as capital gains (generally 25% for shares and 30% for warrants if the warrants are sold instead of exercised to buy the shares) when the employee sells the shares (or warrants), compared to traditional stock options, which are taxed as salary (~50% income tax for the employees plus ~31% social security contributions for the company).

The stock options are tied to the employment and cannot be sold to anyone. If an employee quits earlier than expected, some of the stock options will become invalid. This is accomplished through a vesting schedule whereby the employee gradually earns the right to retain more and more of the stock options.

When setting up a stock options program, you simply sign a stock option agreement between the company and each employee. That’s all! Later, when the employee (eventually) wants to purchase the shares, a general meeting of the company should decide to issue the shares. In case of warrants, the warrants can already be issued at the time of grant of the QESO and held by the company until the QESOs are exercised (see below).

Remember that the rules regarding QESO are still quite new, and not thoroughly tested in the real world yet. Even though experienced lawyers and tax advisors have reviewed the StartupTools documents, you may want to consult legal, tax and financial advice before implementation. No one will be able to provide definite answers to all questions regarding the new law until the courts have had their say, which probably won’t happen earlier than 2024(!).

Also please note that the information in this guide applies to employees who are Swedish tax subjects who are working and living in Sweden. If that’s not your case, this may not apply to you. Also see the discussion below regarding strike price.

On 1 January 2022 some changes to the legislation came into force, read more at the end of the post.

Employee Incentive Programs

Do you really need an employee incentive program? Why? Do you want to incentivize employees to work harder? To sell more? In those cases perhaps it’s better to use a standard bonus program giving short-term incentives for certain behavior.

Ownership-related incentive programs may require more bureaucracy and can become complex to administer, so use with caution. There are of course several reasons why it’s a good idea to give employees long-term incentives in the company (e.g. company culture, aligned interests, competitive situation, big potential long-term upside etc.) but there are also downsides (paperwork, tax risks, somewhat complicated etc.). This guide will not discuss all the pros and cons, but assumes that you have decided to implement such a scheme or that you are curious on how it works.

There are three main ownership-related kinds of incentive programs:

Shares. Let the employee buy shares, either from one of the existing shareholders or through a new share issue. Remember that the transaction has to be on market terms or the tax agency will give you a hard time. If the company valuation is very low, this is possibly the best incentive program.


  • Everyone is aligned from day 1.
  • No future paperwork, everything is settled here and now.


  • The employee must pay market price for the shares immediately, i.e. potential liquidity problem.
  • If share price drops, loss can be greater than if using stock options or warrants.
  • Employee receives formal rights as a shareholder.

Market level warrants ((Swedish: marknadsmässiga teckningsoptioner, described in more detail in the warrant guide). This used to be the most common scheme for companies with existing or soon-to-be investors. This is similar to stock options, but the employee pays for a right to purchase shares at a fixed valuation (not very low) at a later date. If the actual share valuation at that date exceeds the fixed valuation, the employee will presumably exercise the right to buy shares, thereby either making a profit (by selling the shares) or becoming a shareholder (at a reduced cost).

Pros (compared to employee stock options):

  • The company gets some initial funding from the employees (typically 10-20% of current share price).
  • Can be used by all companies, not only those meeting the criteria for lower-tax stock options.

Cons (compared to employee stock options):

  • If the share valuation doesn’t increase as expected over time, all incentives (and the initial investment) are lost, which is not the case if the employee is a shareholder.
  • Employee needs cash to pay for warrant today, and to buy shares later.
  • Much more paperwork and higher costs to implement.

Employee stock options (Swedish: personaloptioner/PO). This used to be a bad alternative due to tax implications, but thanks to the new legislation regarding tax relief for so-called qualified employee stock options (“QESO”, Swedish: kvalificerade personaloptioner/KPO) this is expected to become the new standard for startups meeting the law’s criteria (see below). The employee receives a right to purchase shares almost for free at a later date. The employee can make a profit (by selling the shares) or becoming a long-term shareholder.


  • Clean cap table.
  • Fewer rights than for shareholders, e.g. no dividends, no voting rights etc. (Yes, this can be both an advantage and a disadvantage.)
  • The employee may feel less involved compared to being a direct shareholder.
  • Only works well tax-wise if all criteria are met (including the 3 year employment rule).


  • Fewer rights than for shareholders, e.g. no dividends, no voting rights etc. (Yes, this can be both an advantage and a disadvantage.)
  • The employee may feel less involved compared to being a direct shareholder.
  • Only works well tax-wise if all criteria are met (including the 3 year employment rule).

Whatever type of program you choose, and no matter if it’s share based or bonus based, it’s never a good idea to simply copy-and-paste someone else’s incentive program since it may not give the same result for your employees.

Criteria for Tax Relief when using QESO

The regulation on QESO, implemented in the Swedish Income Tax Act chapter 11 a  (Swedish: Inkomstskattelagen 1999:1229), contains a list of rather detailed criteria that must be met by the company, the employee and the stock options themselves, in order to avoid taxation completely when converting the stock options into shares (or warrants).

Taxation only happens when the employee later sells the shares (or warrants), and the profit will then be taxed “only” as capital gains (typically 25-30%, compared to salary taxation up to 50%). Note: if the company is a close company (Swedish: fåmansbolag) and the employee’s shares are qualified (Swedish: kvalificerade andelar, “3:12-reglerna”), to avoid higher tax levels, the employee may first have to start a holding company and transfer the shares to the company before selling them. This is usually not a big problem and can be solved later. In case of warrants, this solution is, however, not as tax efficient since capital gain on warrants is a taxable income for the holding company.

If any of the criteria is not met, completely different tax rules apply. In that case, I do not recommend you to use stock options, but to use market level warrants instead.

The following summary of the criteria is not 100% complete as there are some exceptions to the main rules. If you are in doubt, please read the law (it’s only 18 clauses) and/or consult a lawyer.

Company Criteria

  1. The company must be a Swedish limited company (Swedish: aktiebolag) or a similar foreign company with a permanent establishment in Sweden.
  2. The average number of people working in the company the previous fiscal year must be lower than 150 (new for 2022, previously it was 50)
  3. The previous fiscal year’s revenue or assets must be below SEK 280M (new for 2022, previously it was SEK 80M)
  4. The business must be a maximum of 10 years old.
  5. Public bodies cannot control 25% or more of the company.
  6. No shares of the company can be traded on a regulated market.
  7. During the first three years, the main business cannot be:
    • banking or financing (note: fintech should usually be fine),
    • insurance,
    • coal or steel production,
    • trading of land, real estate, commodities or financial assets,
    • long-term leasing of premises or housing, or
    • legal, accounting or auditing services.
  8. The company cannot be insolvent or similar.

Receiver Criteria

  1. The receiver must be an employee or a board member of the company for at least three years from the signing date, and during these 3 years:
    • work in average at least 30 hours per week (not applicable to a receiver that is solely a board member), and
    • receive salary corresponding to at least 13 income base amounts (Swedish: inkomstbasbelopp, SEK 923k for QESO granted during 2022, so about SEK 26k/month over 3 years) if employed, and 1.5 income base amounts (SEK 106,5k for QESO granted during 2022, so about SEK 36k/year over 3 years) if a board member.
  2. The receiver (including family) cannot own more than 5% of the company already.
  3. The receiver should be a Swedish tax subject. This is not a specific criteria by law, but if the employee is taxed in another country, Swedish tax rules don’t apply to the employee. The (Swedish) company is still taxed according to Swedish rules though. Read more below regarding employees moving abroad.

Stock Options Criteria

  1. As of the signing date, the value of the employee’s total stock options in the company cannot be more than SEK 3M, and the total value of all employee’s stock options cannot be more than SEK 75M. In this context, the value of a stock option is defined as the value of the underlying share.

According to the new law the share value is based on the fair market price transactions of the company’s shares during the latest 12 months. If no such transactions have taken place, you use the equity in the latest established balance sheet and divide by the number of shares in the company. If there is no established balance sheet yet, you use the shares’ nominal amount (Swedish: kvotvärde).

  1. If using the stock options to buy shares, the employee must do so between 3 and 10 years from the signing date.

Option Pool

Perhaps you’re planning to issue stock options to future employees, not only existing ones. Maybe you’ve heard of option pools. Swedish companies cannot easily create a pool of stock options to give to employees later on. Luckily, you can achieve essentially the same effect in an even simpler way.

If you’re discussing with potential investors and want to include an option pool in the financing round, there is a workaround. When communicating the cap table, simply include a virtual option pool as if they were already converted into shares. This is not a real pool, it’s just a way of communicating the intention and letting everyone calculate on dilution effects etc. When doing the formal investment paperwork, just remember to remove the non-existing stock options and perhaps add an intentional clause about everyone agreeing to issue more stock options soon.


Vesting defines what happens if the employee quits earlier than expected. A typical setup forces the employee to return some stock options (the “unvested” options) if the employee quits for whatever reason. The earlier, the more stock options are returned. After some time (typically 3-5 years), all stock options can be kept (i.e. are “vested”) even if the employee quits.

Example: Using 5 years vesting could mean that if the employee leaves after 48 months, he/she can keep 48/60=80% of the stock options.

Three Years Cliff

Remember the criteria that the employee must be employed for at least 3 years to avoid high taxes (both for the company and for the employee)? What should happen if an employee leaves within 3 years? The normal case will probably be that the employee simply loses all stock options. This is often referred to as a cliff.

Example: Using the 5 years vesting period mentioned above and 3 years cliff, nothing will vest during the first 3 years, but after 36 months, the accumulated 36/60=60% will vest and the remaining 24/60=40% will vest over the following 24 months, typically 1/24 every month.

Early Exit

What if the company is acquired before the end of the vesting period? If the employee is still in the 3 year cliff, perhaps the employee should be allowed to keep a proportional number of stock options even though 3 years haven’t passed yet, i.e. the cliff is disregarded. But, to avoid high taxes according to the new law, the employee must wait at least 3 years to buy the shares (or warrants). So, how do you deal with an early exit? I see mainly three options:

  1. Ignore cliff: One solution is simply to just disregard the cliff, let the employee buy shares (or warrants) for the vested (but not unvested) stock options and accept the higher taxes. At the time of the exit, the employee will have to declare an income of labor and pay taxes on the full value of the shares (or warrants), as if it were salary. The company will have to pay social contribution fees based on the same amount. On the other hand, since an exit just happened, there should be liquidity to pay the taxes.
  2. Accelerated vesting: Same as above, but both the vested and unvested stock options can be used to purchase shares (or warrants).
  3. Don’t touch the stock options: If the startup, after the exit, continues to run a business with the same key employees, why not let them keep the stock options and later let them buy the shares (or warrants)? The acquirer (who by this time owns a majority in the startup) should then be obliged to purchase the employees’ newly bought shares (or warrants) for a defined fair market value. This way, the criteria in the law are met and both the company and the employee avoid high taxes. This setup must be negotiated by the company in the exit.

    Note: during the whole vesting period the criteria regarding the character of the main business (p.7 under Company Criteria above) must be met, i.e. even the remaining time after the acquisition. This may be problematic in such cases where the acquirer is a company group that does not fulfil this criterium.

The StartupTools document template allows all scenarios. Upon signing the stock option agreement, you must decide if you prefer to use accelerated vesting or just to ignore the cliff.  No matter what you choose, the company will always have the option to leave the stock options untouched.

There is an exception to the 3 year rule. If you can make a formal merger (Swedish: fusion) you may be able to keep the low tax rate, see §§ 17-18 in the law. I’ve never heard of a startup exit in the shape of a formal merger (where the acquired company is automatically dissolved) but perhaps we will now see more acquisitions of Swedish startups happen this way? Perhaps the acquirer will start a new Swedish daughter company and merge this with the startup?

Implementing a Stock Options Program

This section will guide you through the steps to set up an incentive program for employees using QESO.

Step One – Prepare Documents

  1. Define terms.
    1. Vesting. Following the discussion above, decide on a vesting period (3-5 years) and define what happens if the employee leaves early and in case of an early exit.
    2. Expiration date. When shall the employee have the possibility to buy shares? This is up to you to decide but should be between 3 and 10 years to take advantage of the new legislation, and not before all options are vested. To keep things simple, if you plan to create more stock options soon, you can set the expiry date to about one year after the vesting period ends. If you create more options within a year, they can have the same expiry date so all employees finally buy shares at the same day.

      Also, you can use a long open window (e.g. 4-10 years) but remember that in order to benefit from the lower taxes, it’s not enough for the employee to notify the company of his/her intention to buy shares within 10 years, but the actual shares must be issued to the employee within 10 years. Typically, this will happen at the company’s next annual general meeting. In practice, the employee should therefore notify the company within 8-9 years, so there is plenty of time for an annual general meeting before the 10 year deadline is met.

    3. Strike price. This is the share price that the employee has to pay if exercising the stock option, i.e. buying a new share. This is also completely up to you. Most companies probably set this as low as possible, i.e. the shares are basically free. However, when buying newly issued shares from a company, the legally lowest price to pay is the nominal value (Swedish: kvotvärde) which is defined as the company’s share capital (often SEK 25k or 50k) divided by the number of shares in the company, so it’s a really small amount.

      Note: If the employee is, or becomes, a tax subject in another country, the tax rules of that country applies to the employee’s stock options. Some countries (including the U.S.) have less favorable tax laws for stock options and may require the strike price to be at least the fair market value as of the signing date. So, for example, if an employee is an American citizen or if one of your employees may move abroad while owning the stock options, you should talk to an international tax expert and perhaps set the strike price to the fair market value, as well as change some other terms of the stock option agreement. If you’re confident that the employee will only be a Swedish tax subject and live and work in Sweden until the stock options are exercised, you can probably leave the strike at nominal value.

  2. Prepare the Stock Option Agreement. Download it below and fill in the blanks. Make sure you understand what you are doing. If in doubt, talk to your legal advisor.
  3. Update SHA. Down the road, when it’s time for the employee to (hopefully) buy shares, the employee must adhere to the existing shareholders’ agreement (SHA). This is agreed upon in the stock option agreement. Also, the parties to the existing SHA must vote for the new share issue when the employee buys shares, and allow the employee to enter into the SHA. This is solved by a clause in the SHA, forcing the parties to vote for the share issue and to accept stock options holders to enter into the agreement. Make sure this is done right by asking a legal advisor for help, or use the StartupTools Shareholders’ Agreement template.

Step Two – Talk to the Employee(s)

It might seem obvious but it’s essential to involve the employee early in this process. After reading this guide you may understand how stock options work, but it is quite complex! Make sure that the employee understands why you want to have an incentive scheme program using stock options, how it works and what the limitations are. Make sure to include:

  • Why have a long-term incentive scheme program? What are the pros and cons?
  • Why use stock options instead of just handing out equity?
  • How does it work, from the perspective of the employee?
  • What happens if the employee quits or is fired?
  • What tax risks are associated with QESO?
  • Stock options are not shares! No dividends and no voting rights.
  • The employee may have to start a private company later, to avoid unnecessarily high taxes if he/she wants to sell the shares later.

While it’s important to communicate with the employee, it’s as important not to promise anything too early. Unless you’re really planning to implement the scheme very soon, don’t promise anything.

Step Three – Execute

  1. Hold a general meeting (annual or extraordinary). This is not required, but it’s always a good idea to include the shareholders in the process and have them approve the plan for stock options.
  2. Sign the agreement. The employee and the board sign the Stock Option Agreement (preferably digitally). If you have a big board and it’s inconvenient to have everyone sign it, the board can give a power of attorney to one of the board members to sign on its behalf.

The Most Common Mistakes

It is still early to evaluate failures regarding established qualified employee stock options programs since most of them haven’t vested yet. The earliest ones with the shortest possible vesting period (3 years) has recently expired or will expire later this year (2021).

But from what is known so far:

  1. Mistakes are often related to group structures, forgetting that some requirements concern the group as a whole and some requirements concern each company within the group separately. This is worth looking into if your company is part of a group structure.
  2. Another common error is when the stock option refers to a share in a different company, usually a subsidiary. It must be the same legal entity issuing the options, and later the shares.
  3. Some mistakes concern the age of the business, especially when the business is acquired from another company.

More insights will be added further on as the programs vest and we learn more.

Changes In The Current Legislation

The Swedish government has made some changes and adjustments in the initial legislation regarding qualified employee stock options. These changes came into force 1 January 2022:

  • As mentioned above, it is now possible to issue qualified employee stock options with a right to acquire warrants instead of shares, provided that the warrants entail a right to acquire shares in the company (or group company). This was initially thought of as a codification of a case from the Swedish Supreme Administrative Court, but contrary to the court case, no immediate subsequent acquisition of the share is necessary. It is not even necessary with a subsequent acquisition of the share at all.It will be possible to issue qualified employee stock options to board members and deputy board members.
  • It is also possible to issue qualified employee stock options to board members and deputy board members. Within company groups, it will also be possible for a company to issue qualified employee stock options with a right to acquire a share or a warrant of another company in the group.
  • In order to allow more companies to use qualified employee stock options, the conditions regarding the size of the issuing company (company group) were changed. Instead of the initial limits, whereby the average number of employees needed to be less than 50, and the net sales or total assets were not allowed to exceed SEK 80 million, the current limits are now an average number of employees of less than 150, and a maximum net sales or total assets of SEK 280 million.
  • Further, it is now possible for a company to issue qualified employee stock options with a right to acquire a share or a warrant of another company in the group.

Using Warrants As Part Of A QESO Plan?

Firstly, why? The reason to use warrants is to ensure the future issue of shares to the stock option holder. According to Swedish law a private limited liability company cannot own or hold its own shares, and a general meeting can only decide about the issuing of shares the following year, not three years in the future. This means trouble may occur if the future general meeting consists of new shareholders who are unwilling to vote for issuing of shares to the employees when they want to exercise their stock options. Warrants, however, can be subscribed and held by the company, and compared to stock options the warrants entail a formal right to shares without the need of a new decision from a general meeting. Thus, the existing general meeting can issue warrants that can be exercised into shares in accordance with the time frame of the stock option scheme.

However, there is an important difference between the use of a warrant as the qualified employee stock option and the use of a warrant as the instrument acquired through the qualified employee stock option.

Warrants As QESO

The Swedish Tax Agency has officially stated that warrants in general are considered securities for tax purposes and therefore do not constitute employee stock options. This means that it should not be possible to use a warrant as a qualified employee stock option. However, there is a court case from the Swedish Supreme Administrative Court (Swedish: Högsta förvaltningsdomstolen), handed down in 2004, where Finnish warrants (which are not very different from Swedish warrants) were not deemed securities for tax purposes until the applicable restrictions ceased to exist. There are later court cases that might supersede the 2004 case, but such opinion can be questioned.

The Swedish Tax Agency seems nonetheless to have taken the standpoint that all instruments issued in accordance with the Swedish Companies Act (Swedish: aktiebolagslagen) should, at least in general, constitute securities for tax purposes.

Hence, there might be challenges in using warrants as qualified employee stock options, and it can therefore not be recommended.

Warrants Acquired By QESO

As mentioned above, thanks to the changes in the legislation that came into force 1 January 2022 it is now allowed with QESO-programs where the underlying asset is a warrant with a right to acquire a share in the company group.

Final Words

That’s pretty much it! This guide will not cover how to buy shares using the stock options or the administration related to it. It’s very straight-forward and there is pretty much written about it already, e.g. at Bolagsverket.

Good luck!

/Erik Byrenius & Hannes Rosén from StartupTools in collaboration with tax lawyer Victor Stålblad from Bird&Bird

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46 Responses

  1. Excellent. This type of collaboration and selfless sharing is what makes Sweden the unicorn factory it is!

    Now… who can make a benchmark database with comparisons of key metrics for different business models (marketplaces, SaaS etc)? I offer donuts and free tickets to see the new Avengers movie in return!

  2. Thanks for writing the guide. Denmark is apparently even more complicated ?

    All of these regulation and Tax complications. Makes it hard to believe that we can build “really” big tech companies in the Nord, with the same valuations as North America.

    I wonder how the Investors are taxed ?

  3. Thanks for an excellent post Erik.

    I am wondering if the Strike Price has to be set to the Nominal Value at the time of exercising the option (e.g. in 4 years), or if it can be agreed to be the Nominal Value at the time of signing the option contract (e.g. today)?

    1. Hi Anton, I’m not sure if I understand what you mean. The nominal value (sv. kvotvärde) is the same over time. That is the legally lowest amount anyone can pay when buying a newly issued share.

  4. Thank you for the great document and guide, this will be very useful for our organization.

    I have one question relating to income of the employee:
    “receive salary corresponding to at least 13 income base amounts (Swedish: inkomstbasbelopp, about SEK 820k, so about SEK 23k/month).”

    How is this calculated? 820k/12 is almost 70k/month, which seems unreasonably high, so that can’t be how its compiled. Would be very helpful to understand how it is calculated since the inkomstbasbelopp changes every year.

  5. Erik,

    Is it possible to use options program as described above for non-employees?
    For ex. advisors or Board members?


  6. Thank you Erik!
    Now one thing I wonder is what happens if an employee signs at a date when the company meets all the criteria for QESO (less than 80M revenue, less than ~50 employees, etc) but 3 to 10 years later, when converting the options into shares, the company has exceeded some of those limits (massive revenue or explosive hiring growth…)
    Or, asked differently: are those criteria applied to the company upon the date of signing the QESO, or upon the date of converting the options to shares, or upon the date of actually selling the shares later on?
    A startup’s future being totally unpredictable, it seems using any date later than the QESO signing date implies the employee’s risk of not meeting the QESO conditions increase with the vesting time…

    1. Hi Erwan, for most of the criteria it’s the situation on the signing date that matters, or the calendar or fiscal year before the signing. The only exception I can recall right now is that during the first three years after the signing date, the company still cannot do business within banking, insurance, coal, real estate etc. See §8.

  7. Great article! Thanks!
    Recently I’ve started work with a team, working on a startup and we were looking for such a guide you’ve posted. Yours is even more detailed and full of useful information. Highly recommend!

  8. Anyone have an easily available equity/option calculator which can be provided to employees in relation to QESOs, so you can allow them to play around with potential scenarios/future values?

    1. This is a great question. There should definitely be one. I haven’t created one myself but I’m sure there are general employee option calculators out there, which may or may not work for QESO. I’ll put on my backlog to find or create a QESO-specific calculator, but don’t expect any quick action.

  9. Thanks for the very details write up! I’m just trying to figure out what the tax implication is for a non SE resident,

    1. If a person is not a Swedish tax resident, one would need to examine the relevant jurisdiction and the relationship to Sweden. Generally someone who spends more than 183 days per year in Sweden is considered a Swedish tax resident. If that is not the case, any setup would require further advice and investigation.

  10. Thanks for sharing this, very helpful!
    I just have one question…to make it easy to understand to everyone who is going through this as an employee. Taxes aside, let’s say the employee agrees to get 200 options as QESO, with a market value of 500 per share, 3 year vesting period. After the 3 years period, the employee wants to exercise them, so does he/she needs to purchase the option and pay from his/her own pocket 100.000 SEK (200*500)? so after the 3 year period, he/she has the right to purchase the shares at a fixed price (500 SEK), so the total investment would be 200.000 SEK (Purchase of the option to buy those shares at a fixed price and the purchase of the shares itself). Would the employee be profiting if the shares are greater than 1001 SEK per share?
    I hope you could understand this example…

    1. Hello! Thank you for reaching out. Your question has multiple parts that I’ll try to answer:

      First and foremost, there is nothing in the QESO regulation that determines how much, if anything, an employee should pay to enter into the agreement (purchasing the option to later purchase the shares as you formulate it). This varies between companies, with a general norm toward little or nothing – the StartupTools QESO Agreement template suggests “free of charge” but it is a changeable variable within The StartupTools Standard and having some cost is not unusual.

      Secondly, the price you will later pay for exercising the options, is called ”strike price” and is stipulated in the contract. The lowest this is allowed to be according to the regulations is the nominal value (sw. “kvotvärde”) per share, but how this is set varies from company to company and is a part of the overall deal.

      Market value generally only comes in as a variable in the equation when the employee assesses whether exercising the options makes sense, and then in relation to the strike price. (If strike price is lower than market value, the option has value and makes sense to exercise.)

  11. Great summary of complex matters! Regarding the QESO, the future issuance of shares to the QESO holders can be guaranteed through an agreement signed by existing shareholders when the QESO program is launched, and to which any new shareholder will have to adhere.

  12. Thank you for sharing, it has been very helpful in setting up our stock option program!
    I have 2 questions that have come up when working with the agreement.
    1 Can you in the agreement with the employee give them a % of the company with dilution protection rather then a fixed amount of stock options. For example Employee A shall have the right to subscribe for an amount of shares corresponding to 1% of the company on the day of the subscription but not later than (date 3 years after sign). So if you sell the company within 3 years it is 1% of the shares at that date, and if you don’t sell within 3 years it is the amount of shares in the company on the date 3 years from signing that determines the amount of options and then shares.

    2 Reflection/question on your common mistakes around group structures. If you sell the company within 3 years to a large company or a non Swedish company that does not fulfill the requirements for the stock options with the beneficial tax , does this affect the option to let your original company (with the options tied to it) to continue as a subsidiary for the remaining period and the employees can subscribe for their shares at a later point once the 3 years have passed and still get the beneficial tax? Thanks again for all your work with this!

    1. Hello Stefan! Good to hear from you!

      1. I am not certain I understand precisely how you mean, but in short – yes. It should fit within the legal framework to define it in terms of % of the company rather than amount of shares. One could also calibrate that via a dilution clause. Regarding accelerating the vesting time in case of the company being sold before three years has passed, there are certain, separate, aspects of that to be considered independently of the ownership %.

      2. As long as the company fullfils the criteria when the options are issued it should be fine in principle, it can be kept as a subsidiary. However, there are exceptions to what sector of business a company is permitted to be involved in and still qualify for QESO. And the group the company is taken into may not have more than 25% of their business within such a sector. Also keep in mind that the issued shares will also have to be in the same subsidiary. The options can not issue shares in another group company.

      Enjoy the new version of our templates!

  13. Thank you for a very clear and insightful site!

    Two questions if I may:
    1) Do you have guidance on RSUs as well? I’m specifically trying to understand if a RSU program with a double trigger (time/ KPI and liquidity event) can save the company from having to keep the (future) tax liability on their books.
    2) Can a Warrant term include two different expiration dates/ strike price; allowing the warrant holder to choose if he/ she exercise the warrants in year 3 at SEK 0.30 or in year 5 at SEK 0.50 (both calculated using the Black-Scholes model)

    1. Hey!
      Of course – we love questions!

      1. No, we don’t currently have anything on RSUs. We currently provide two instruments to adress employee equity as incentive: QESO & Warrants. Might be worth looking into though.
      2. Good question, nothing I know or can think of stands in the way of making such a construction, but we don’t have it in our templates. If you want to I can introduce you to a lawyer you would be able to help you (with a StartupTools discount).

  14. Hi! Thanks very much for the information.

    I have a question regarding the salary of board members. Since the ‘inkomstbasbelopp’ changes every year, and the board members need to be re-elected every year. If we sign the KPO agreement with our board members in 2023, do we then pay them 3 years salaries all based on the amount of 2023, or change it yearly?

    Thank you in advance!

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