US vs. European equity plans: How to stay compliant across jurisdictions

While US equity plans and their operation often follow a simple standard, European jurisdictions typically involve greater legal, tax, and administrative complexity. For companies operating across Europe, choosing an equity management platform that can accommodate these local compliance nuances is critical.

In our recent webinar, Migrating to Ledgy, Gregory Hartley, Sales Lead, and Emilie Sylvester, Tax and Compliance (Counsel) at Ledgy, explored where these differences emerge and what you should look for when choosing a platform that can support global expansion.

This article summarises the key takeaways, including how equity pools, vesting schedules, reporting, and legal grant processes differ across the US and Europe, and what companies can do to stay compliant as they scale.
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Meet the hosts

Gregory Hartley, Sales Lead at Ledgy
Gregory has spent the past four years at Ledgy helping companies make equity management more efficient and secure. He works with companies to navigate the complexities of equity compensation, helping them establish the right processes from day one.
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Emilie Sylvester, Tax and Compliance (Counsel) at Ledgy
An incentives lawyer formerly with Wilson Sonsini and Tapestry Compliance, Emilie brings expertise in global equity plan design, tax structuring, and compliance. She works closely with the product team to embed country-specific legal and tax requirements into the platform, enabling companies to manage equity plans with confidence across every market in which they operate.
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Three key differences between US and European equity plans

Equity plans look similar on the surface: grants, vesting, exercise, leavers. The legal and operational requirements behind them do not. The webinar covered three of the biggest differences companies run into when managing equity across the US and Europe:
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• Exercise processes
• Transaction readiness
• Pools and plans
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Exercise processes

Exercise workflows are a good example of how requirements diverge across jurisdictions. In the UK, exercises typically require a Section 431 election. In Switzerland, they require equity annexes and holding confirmations. Companies without platform support for these requirements fall back on manual processes, increasing administrative work and compliance risk.
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Transaction readiness

Transaction readiness presents a different kind of challenge. As companies grow, equity data often splits across systems, and without a single source of truth, preparing for an IPO, fundraising round, or other major transactions takes longer and carries more risk than it should.

As Emilie Sylvester, Tax and Compliance (Counsel) at Ledgy, explains, this fragmentation is one of the biggest operational differences seen between the US and European companies:

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How do equity pools and plans differ across jurisdictions?

The term “equity pool” doesn’t mean the same thing in every jurisdiction. The legal mechanism for establishing a pool and administering the plans and equity that sit under it changes from market to market.

As Emilie shared, the differences start with how the pool itself is legally structured:

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These structural differences have practical implications for how companies administer equity plans across different markets:
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• US: Equity pools are typically authorised but unissued shares reserved by the board, with the available pool size set out in the company’s incorporation documents
• Switzerland (and much of Europe): Equity pools are commonly created as conditional capital. Increasing the pool usually requires shareholder approval and registration with the commercial registry, not just a board resolution, which makes expanding the pool a bigger corporate step than it is in the US
• UK: Tax-advantaged share schemes, including EMI scheme and CSOP scheme structures, carry statutory limits on the number or value of shares that can be issued
• Germany: Tax treatment often pushes companies toward phantom equity schemes, where participants receive the cash value of shares without holding actual shares. A company may prefer to structure this as a phantom pool rather than a standard equity pool. Ledgy allows companies to view them side-by-side on a single cap table
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Read how Neural Concept secured a Series C-ready cap table in four weeks after switching to Ledgy for native support of their Swiss founder pool structures.
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Why legal grant processes differ across jurisdictions

The legal process for granting equity varies significantly between the US and Europe. In many US states, a board resolution is the legal act of granting equity, after which the employee simply accepts the award. In the UK and much of Europe, grants are typically made without consideration, meaning the award must instead be executed as a deed.

Executing a deed comes with additional legal formalities. The company must sign either by two directors, a director and company secretary, or a director and witness, while the individual must always sign in the presence of a witness. These witnessing requirements have no direct US equivalent, and failing to follow them correctly can put tax reliefs such as EMI at risk if options are not validly granted.

Ledgy supports the entire grant process by generating deed-compliant documentation, integrating with DocuSign for electronic signatures, and tracking witness requirements throughout the signing workflow.
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How Ledgy supports different equity structures

Ledgy supports multiple pool structures on the same cap table, allowing companies to track issued allocations and remaining headroom for each pool in one place. Each pool is linked to a specific equity plan, which defines the grant type, naming convention, and associated document templates. Those templates automatically pull data from HR systems and other integrations, ensuring grant, settlement, and termination documents are generated accurately and consistently.

These capabilities also support large, multinational equity programmes – for example, Revolut uses Ledgy to manage equity for more than 10,000 participants across 20 countries.
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Key differences between US and European equity vesting

While the fundamentals of a vesting schedule are similar across markets, the way companies structure and administer equity vesting can differ significantly. Understanding these regional differences is important, especially for companies operating internationally or hiring across borders.
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How does equity vesting typically work in the US?

In the US, equity vesting schedules typically follow a standard structure compared to the more complex approaches often seen in Europe.

The most common US vesting schedule is four years with a one-year cliff. This standardisation largely exists because broader US equity models, such as Incentive Stock Options, generally do not require intricate vesting mechanics. The US market isn't familiar with the complex leaver concepts that dictate equity retention in countries like the UK. Once equity has vested, it’s usually retained by the employees, regardless of why they leave the company.
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How does equity vesting work in Europe?

In contrast to the US, equity vesting in Europe involves significantly more structural complexity and regulation:
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• Performance-based vesting: While simple time-based vesting is the norm in the US, European companies frequently apply specific performance conditions to their vesting schedules. This is especially common for senior hires, public companies, and PE-backed companies. Grants often combine both performance and time-based vesting
• Diverse equity types: The European market uses multiple equity instruments – such as growth shares, phantom shares, and BSPCEs – each with its own vesting conditions
• Complex leaver mechanics: In Europe, a company might use the vesting schedule itself to dictate leaver treatment, establishing what departing employees get to keep. Post-termination exercise rules are also highly regulated, with different requirements depending on the applicable tax treatment and the employee’s reason for leaving
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Managing these variations requires more than a standard vesting workflow. Ledgy supports jurisdiction-specific equity plans with configurable vesting schedules that can be tailored to each plan type.
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EMI and CSOP leaver rules explained

Exercise and leaver processes show some of the sharpest practical differences between the US and Europe. US employees typically keep vested equity regardless of why they leave. Many European share schemes instead impose strict post-termination exercise windows tied to country-specific tax rules and market practice. Two UK schemes illustrate this:
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• Enterprise Management Incentive (EMI) schemes, participants who don't exercise within the required window after leaving can lose part of their tax relief
• Company Share Option Plan (CSOP), the exercise window itself changes depending on the reason for departure
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As Emilie explains, the timing of an employee’s exercise can have significant tax implications:

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Companies operating across multiple jurisdictions have to track these rules separately for every scheme and leaver reason – which is why the leaver rules and exercise windows, particularly for EMI and CSOP, need to be configured individually.
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How reporting supports compliance and transaction readiness

Managing equity effectively depends on having accurate and accessible data. As companies grow, reporting becomes increasingly important for meeting tax and accounting obligations and preparing for major events such as fundraising rounds and IPOs, where questions will be raised around your reporting and tax compliance.
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What reporting does Ledgy offer?

Ledgy offers flexible reporting for financial expensing, tax compliance, and equity compensation. The platform’s reporting capabilities work much like a pivot table, allowing you to configure and filter data to your needs. It includes point-in-time reports, custom filtering and grouping, and configurable report templates. Ledgy also supports expensing under IFRS, UK GAAP, and US GAAP (ASC 718), as well as HMRC reporting for EMI schemes, CSOP, and other UK share plans.
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What is Ledgy’s document auditor and how does it work?

The document auditor proactively scans and flags any potential mismatches between the digital equity information entered into the Ledgy platform and the actual signed equity agreements attached to those grants. By cross-referencing the system data against the core equity documents, it helps ensure your digital cap table mirrors your equity documentation and easily identifies if any signatures are outstanding.
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Migrating to Ledgy

Managing vesting schedules, leaver rules, and compliance across multiple jurisdictions shouldn’t mean drowning in fragmented spreadsheets or paying soaring external legal fees during a transaction. Ledgy provides a single source of truth for cap table data, equity workflows, and compliance, helping companies manage complex European requirements while staying transaction-ready as they grow.
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A smooth, fully supported migration

By the time companies expand across multiple jurisdictions, they're often managing equity data across spreadsheets, legacy platforms, and disconnected legal records. Migrating to Ledgy brings that information together in a single platform without disrupting day-to-day operations.

Every company follows a structured implementation process with a dedicated Implementation Specialist and Customer Success Manager. Migration begins by importing data from your existing platform or spreadsheets before validating it using Ledgy's point-in-time reporting.

Once the data has been verified, the focus shifts to configuring the platform for ongoing use: linking historical grant agreements through the document auditor and setting up the reports and workflows your team needs.

Even when records are incomplete or legacy systems have been poorly maintained, the implementation team can help reconstruct accurate cap table data from the documentation you do have. As Gregory explains:

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The result is a centralised, audit-ready record of your equity data. Whether you're raising capital, preparing for an IPO, expanding internationally, or navigating a liquidity event, you can move forward without rebuilding your cap table or manually reconciling information across multiple systems.

Keep your equity data, documentation, and reporting in one place with Ledgy – book your free equity management demo to speak with one of our experts.