Early stage investors group questions stock options in draft start-ups bill

The Investors Portugal association, which represents early stage investors, is contesting the treatment given to ‘stock options’, particularly with regard to members of corporate bodies, in the new ‘start-ups’ law, according to a statement.

The organisation said that it “received with great concern the news in the media that it is certain that the discussion of draft law 56/XV will not change the initial text of the government’s proposal, with regard to the exclusion of members of company bodies from the treatment of stock options, maintaining the unequal treatment of other employees of start-ups and scale-ups,” it said.

According to the organisation, “if this news is confirmed, it would be a lost opportunity to create a really competitive start-up law with the capacity to attract and retain talent, fundamental to the creation and permanence of start-ups and scale-ups in the Portuguese ecosystem”.

According to the entity, “these technology-based companies need to attract and retain human talent, in phases in which they do not have the financial means to compete with the salaries paid by large companies”, and “stock options are the instrument used internationally for this purpose, whether for members of governing bodies or for other employees, because they align incentives and motivate permanence”.

The association pointed out that “it is not enough to count on the mild climate, the security, the talent and the friendliness of the Portuguese people to make the ‘early stage’ ecosystem progress”, stressing that “it is necessary to create legal and regulatory conditions that make Portugal really competitive with other European and international ecosystems”.

The association also said that it was with “expectation of the added value that it would bring to the Portuguese ecosystem” that it participated “actively in the preparation of the bases of a new legislative package to promote entrepreneurship in Portugal, at the headquarters of the Strategic Council of Startup Portugal, mandated for this purpose by the government and which resulted in concrete and well-articulated proposals”.

However, the association regretted, “these were only partially translated into the draft Law no. 56/XV, and in some fundamental aspects, such as the ‘stock options’, they were altered and distorted from their initial objective when translated into the draft law”.

“A law that was intended to be basic and lasting for the regulation and promotion of the entrepreneurial ecosystem and, in particular, as a catalyst for the growth of digital and knowledge-based companies, if the news is confirmed, it seems that it will be born, at least in this aspect, ineffective and in need of revision in the long term”.

The proposed law on ‘startups’ provides that “the workers of all companies that qualify” with that status “will only be taxed at the time of disposal of the shares acquired in this way”.

However, the tax reform is not expected to include managers and founders.