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[[_TOC_]]
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# Rationale
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## Objectives for Sinergise
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Sinergise was founded as a spin-off from Cosylab by eight employees in 2008, and our people have always been the company’s most valuable asset. Although we have some existing IPR (e.g. Giselle, LPIS, Cadastre, Sentinel Hub, etc.) and a strong project and client portfolio, none of this has much value without employees that push it forward.
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With the ownership offer, the founders want to give employees the opportunity to be more involved in the business-side of the company and gain a greater share in the rewards of our growth and profitability.
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## Objectives for employees
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While many employees have explicitly expressed their wish to invest in Sinergise it is, of course, a free decision of each individual to become a share-holder/co-owner, which will not affect their standing or position in the company in any way.
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We believe that Sinergise shares are a good financial investment. We pay out a part of the company profits to shareholders every year as dividends. More importantly, we expect the value of the company, and therefore its shares, to grow as we move into more developed markets and as our IPR is growing.
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We believe that the company should be owned by the people who work here, therefore we don’t plan on going public (via an IPO) or sell the company in the near-, mid- or long-term future (though who can say what will happen in next decade…). If we did come across a strategic partner, who would be willing to invest and to ensure the long-term development of the company, we might consider this, but we (both management and shareholders) would be quite selective about it and ensure that all co-owners are content and will obviously get their fair share at market value.
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That being said, it might not be possible to grow the value significantly without growing our headcount, or alternatively, increasing the added value per employee, both of which are only possible with employees' active participation.
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# Company valuation
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Share value is related to the market value of the company, which is known only when someone offers to buy it (in case of a takeover or IPO). As this will not happen soon, we have researched suitable, resilient valuation methodologies (e.g. 10-year profit, 5-year revenue, etc.) and have decided on one, that we believe fits most to the company’s objective to grow.
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The company value is calculated once per year, after the annual accounts are completed.
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# Rules of investment
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Employees who would like to participate as Sinergise’s shareholders, must accept and follow these rules:
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* Share in the company needs to be bought at a fair price.
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* Investment is an opportunity, not an obligation. Everyone can decide, whether they want to participate and with what amount (this will in no way affect the terms and conditions of their employment).
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* Investment is accessible only to those who are employed in Sinergise for at least two years.
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* Each employee, who is with the company for 2 years or more, receives an option, every year, to invest up to 15% of their annual gross income (the considered period is 12 months up to the last salary payout, prior to the shareholders' meeting).
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* If one does not make use of the option to purchase at the specific call for purchase, the non-spent amount will be transferred to the next period, but for a maximum of 24 months (i.e. two next calls for share purchase).
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* Each shareholder can sell the share of up to 0.2% of the total company shares to the company per year at any point in time, no questions asked. In case a shareholder wants to sell more than 0.2%, the company will repurchase it in the shortest possible time, cashflow permitting.
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* The value of the sale of the share is equal to the value of the share with the one exception: sale in less than 13 months after purchase is allowed at 20% reduced value.
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* The share purchase transaction is completed once an employee transfers the relevant amount to the company’s bank account.
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* Whenever an employee leaves the company, due to whichever reason (switching jobs, retirement, etc.) they must sell the value of their share back to the company, based on the last official valuation (e.g. from the last finished business year, which at the moment lasts from 1.4. to 31.3., accounts available 30.6.). This rule is also applied in the case of inheritance.
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* The sale transaction of the company’s shares (either buying or selling) is only allowed between the company and a shareholder. Transactions between shareholders or transactions between a shareholder and a 3rd party are generally not allowed (exceptions might occur due to logistical reasons, but each exception must be allowed by a 3/4 majority of shareholders).
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Sinergise responsibilities include:
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* Sinergise will organize a call for share purchase once per year, not later than one month after the annual accounts are submitted.
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* Sinergise will hold enough cash reserves at any point in time to be able to repurchase at least 2% of all shares.
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# Shareholder’s rights and obligations
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## Rights
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* Each shareholder has the right to co-manage the company through voting at the general meeting. Voting rights are proportional to shares held.
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* Each shareholder has the right to a proportional part of the profit paid to shareholders (dividends).
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## Obligations
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* When a shareholder wishes to sell all or part of their share, they offer it for redemption exclusively to the company, which is required to buy his/her share.
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* In case the company is sold to a 3rd party, all shareholders must sell their shares under the same conditions as the rest of the shareholders (including co-founders).
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* When employees purchase a share, they will give to one of the co-founders a Power of Attorney to represent them at the Shareholders’ assembly in case they cannot be present.
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# Dividends
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All shareholders of the company are eligible for dividends (profit payout). The share of profit to be distributed is agreed at shareholders’ assembly based on results and future plans of the company. Typically, between 10 and 30% of the profit will be distributed annually.
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In parallel, we are distributing some of the profit to the employees, and we plan to continue to do so until enough employees hold enough shares to make it worthwhile to discontinue that practice.
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# Frequently asked questions
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### Is participation in company’s shareholding structure mandatory?
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No, not at all. It is neither mandatory nor expected from the employees to participate.
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It is well understood that people have different priorities in life,
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this is an entirely optional investment opportunity.
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### Why does one have to sell the share once he/she departs from the company?
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We would like to see that ownership remains with those who are contributing to the growth of the company, long-term.
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By insisting on sale of the share at departure we will prevent the ownership to dilute in the years to come.
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### Is all of this focused to long-term retention of the employees?
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Yes, absolutely.
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That being said, we do not want to make it harder to leave. The “buyback of the share of up to 0.2% at any point in time” should minimize the impact of ownership on the decision to leave.
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### Are 20% reduced value in selling before one year (13 months) after buying there to prevent people to leave the company?
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No. We would obviously prefer to see those employees investing, that have a vision to remain in the company long-term. But this is not a precondition. The reduction is in place primarily to prevent speculative investments or possible abuse of internal information (i.e. those not known to all employees) – this is why 20% reduction is there and it is valid for anytime someone buys the shares – for selling of these specific shares in less than a year, there will be a reduction if done in less than 13 months.
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### Will the calculation for company’s value remain the same throughout time?
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Yes. The value will always be calculated in the same manner, making the calculation of the owner’s share easily understandable.
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### What is the minimum amount to be invested?
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This depend only on the value of “1 share”, which depends on the “company value” and “number of shares”. An employee can buy also only one share if they wish so.
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### Are there some additional responsibilities expected from the employees who decide to invest?
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Not really. The company's management has always expected for employees to treat the company's assets as they would be their own. Therefore, responsibility and pro-active engagement to grow the company is expected from all employees, regardless of them being the shareholders or not. This opportunity is providing to employees an opportunity for the company to really become a bit theirs as well.
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Formally speaking, all responsibilities of the shareholders are clearly stated in shareholders' contract.
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### Are there any additional costs borne by the employees who decide to become share-holders?
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No. The shareholders' assembly and notary costs will be paid by the company.
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### Which taxes apply with buying and selling the share, and with dividends.
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As a general rule, Slovene taxation rules apply.
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When buying the share there is no tax paid.
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When selling the share there is a tax paid based on appreciation of the value buy/sell.
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When dividends are paid out, there is a tax paid on their value.
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### What is the basis of the decision about the amount of dividends paid out annually?
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The company has been lead in a conservative manner from the very beginning. We prefer security over earnings, which is why vast majority of the past profits stayed in the company. We plan to prefer security and stability in the future as well. When deciding on the amount of dividends, we check the future cashflow projections as well as some specific R&D or growth plans, which might impact the need for cash.
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----
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Document History
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| Date | Author | Change Description |
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|------|--------|--------------------|
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|2021-05-17| mkadunc | Migrated from [the document used when coownership options were first established](https://git.sinergise.com/operations/wiki/-/wikis/2020-Establishment-of-co-ownership-options-for-Sinergise's-employees-(archived)), discussion in #18 | |
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\ No newline at end of file |