Financing
The exercise of stock options requires financing the acquisition of the underlying shares at the strike price determined by your stock option plan. At this point, you will become a shareholder.
If you do not have sufficient funds available, we can consider financing solutions with you that are suited to your needs. What is more, it may be expedient, particularly for tax reasons, to borrow in order to finance the acquisition of shares.
Authorisation of an overdraft |
It is possible to exercise your stock option plans by arranging authorisation of an overdraft.
A bank account opened with authorisation for an overdraft, in the form of a “credit line”, enables you to have a sum of money at your disposal, at all times and without restriction, that is repayable at the borrower’s convenience (within certain limits). Interest is due only on the sums borrowed.
The second possibility offered to stock option holders to finance their option plan is an amortisable loan.
An amortisable loan is a loan, whose sum, term and periodical repayments (amortisations of capital and interest) are determined in advance and are respectively fixed or variable, depending on clearly defined revision clauses.
In this particular case, the stock option holder borrows the entire sum required to take it up, and pays off the capital and interest in regular instalments.
A loan repayable at the end of the term |
The stock option holder also has another alternative to finance taking up the stock option: a loan that is repayable at the end of the term.
Unlike an amortisable loan, it is a loan where the interest is only paid during its term. The capital is not amortised, but is repaid in a single payment on expiry of the term.
In this case, the stock option holder borrows the entire sum required to take up the option and pays off the interest in regular instalments and the capital on expiry of the term.
