Equity management
ESOP Management- Fund management
Liquidity Solutions - Fund managementESOP Consulting
- Fund managementFund Management
TL;DR
In the most recent Equity Matters session, Amit Majumder, Head of Equity Management at Qapita, joined Charlie O'Donnell of NextNYC to unpack what happens when US founders start extending equity across borders - and what the common playbook gets catastrophically wrong. Post-pandemic, global hiring has become table stakes. The equity infrastructure that supports it, for most early-stage companies, has not kept up.
You can watch the full conversation here:
If this topic is relevant to you, subscribe to the Equity Matters newsletter by Qapita to receive future insights like this directly in your inbox.
Most founders approach global equity plans with a single organizing assumption: the plan they built at home, with good lawyers and the right documents in place, is portable. It covers the company as it is today, it covers reasonable growth, and it will hold as the team expands internationally. That assumption is almost always wrong.
The more jurisdictions a company operates in, the more visible the cracks become. Different countries have different rules governing how equity can be issued, how it is taxed, what disclosure is required, and how proceeds can be transferred. What looks like a straightforward RSU or option grant in Delaware can become a securities compliance problem in one country, an exchange control problem in another, and an income recognition event on the wrong date in a third.
"There's a perception of comfort - that you can work with a really good law firm, put all the right documents in place, and be prepared for the now and the near future. But things change. You never know where your company is going to grow."
AMIT MAJUMDER, HEAD OF EQUITY MANAGEMENT, QAPITA
The problem compounds with growth. Organic international hiring is one layer. Inorganic growth - acquiring a company already operating in a jurisdiction - introduces employees whose existing equity arrangements may be entirely incompatible with the acquirer's plan. Founders who assumed their equity infrastructure was scalable discover, mid-acquisition or mid-expansion, that localization is not optional.
The practical implication is not that founders need to solve every jurisdiction before making a single international hire. It is that the homework needs to happen before the offer goes out - not after the employee has already signed and the obligation is already on the cap table.
Related reads:
The question of whether there are countries where equity simply cannot be offered does not have a clean yes-or-no answer. A more precise framing: there are jurisdictions where the mechanics of a standard options grant - the payment of a strike price to a foreign company, the receipt of proceeds back to an employee - run directly into exchange control regimes that restrict how money moves across borders.
The mechanics break in two specific places.
The usual response is to move to a cash-settled or phantom structure - a plan that tracks the value of equity without issuing actual shares, and settles in cash. This avoids the securities and exchange control problems entirely, because no shares need to be issued, transferred, or sold across a border. The tradeoff is explored in the next section, but the immediate answer to the exchange control problem is: phantom equity works where standard equity doesn't, and for some markets, it is the only viable path.
Phantom equity is frequently described in terms of what it avoids: no shares to issue, no securities rules to navigate, no exchange control problems. That framing is accurate as far as it goes. The more useful framing for a founder thinking about long-term outcomes is what phantom equity converts the obligation into - and that is cash.
The question that makes phantom equity uncomfortable is not the failure case. It is the success case. A first engineer who joins a company on a phantom grant and stays for eight years through a $10 billion outcome has earned a meaningful number. That number is not settled in shares at exit. It is settled in cash - coming off the balance sheet, or out of a fundraise, or carved from the deal proceeds themselves. At that scale, it is a corporate finance decision, not just an HR one.
"There's always a catch. Phantom gives you flexibility today, but you're ultimately on the hook to settle in real cash, usually at exit."
There is also an accounting difference that is worth understanding early. A phantom grant sits on the books as a liability - a future obligation to pay a sum of cash to an individual. The accounting treatment differs from equity-settled awards, and the liability mark-to-market as company valuation grows. For early-stage companies, this is often a manageable footnote. As the company scales toward a significant exit, it becomes a line item that acquirers, investors, and legal counsel will scrutinize.
The practical framework that works for most US companies with global teams:
The two can coexist on the same cap table, sized to the jurisdiction and the value of the individual grant. The mistake is treating phantom as a universal default just because it is simpler to administer. Its simplicity today funds a cash obligation tomorrow, and that obligation scales with the company's success.
Curious about how structured equity plans and grants are set up? Reach out to us or visit qapita.com/equity-management/stock-option for a no-pressure walkthrough.
Employee mobility is one of the least-anticipated equity events on a startup's timeline, and one of the most disruptive when it is not planned for. The instinct is to treat a relocation as a people issue - help them with the move, update the payroll system, done. From an equity perspective, a relocation can be a tax trigger, a compliance event, and occasionally a restructuring problem all at once.
The core concept is tax sourcing: the principle that a country's tax authority claims the income that was earned during the period an employee worked there. A grant received while employed in Singapore accrues a Singapore tax interest, even if the options are not exercised until the employee has relocated elsewhere. The employee leaves, but Singapore's claim on the income does not leave with them.
The double taxation scenario is not hypothetical. Moving from Country A to Country B is not the mirror image of moving from Country B to Country A. Some countries tax on exit, others tax on entry, and the question of whether both sides have a claim is determined by whether there is a tax treaty between the two jurisdictions - and whether that treaty covers this specific scenario. Founders cannot assume the treaty answer without checking.
The Section 409A dimension is particularly acute for companies that have been granting equity to non-US employees. In most international jurisdictions, there is no requirement to grant at fair market value - discounted options are permissible. The moment one of those employees relocates to the United States, US tax rules are triggered. Options that were fully compliant under the original jurisdiction's rules can become non-compliant under Section 409A overnight, with meaningful tax consequences for the employee.
"Some of the awards that you might have granted to employees outside the US suddenly become non-compliant from the US perspective. So yes, the key recommendation is to do a bit of planning. Understand where your employees are at the moment and their potential movements.”
The planning discipline that resolves most of this is deceptively simple: ask the question early. Before the offer is made, before the grant is issued, the relevant questions are where the employee is now, what their potential movement looks like, and whether any planned mobility - a temporary assignment, a permanent relocation, a spousal move - is already foreseeable.
Related reads:
Designing equity plans that hold up across multiple countries - with different legal structures, tax regimes, and instrument requirements is a fundamentally different problem from managing a single-jurisdiction cap table. Most tools aren't built for it. Qapita is an equity management platform built to handle the full lifecycle of equity from seed to IPO, with multi-country plan design, administration, and advisory layer that global teams need.
Learn more about Qapita →
The session's central argument is not that global equity is prohibitively complex. It is that the complexity is manageable when anticipated, and expensive when it isn't.
Founders who get it right treat it as a design problem, not a paperwork problem. Exchange controls, phantom cash obligations, Section 409A gaps - none of these announce themselves. They surface at the worst possible moment: mid-acquisition, mid-relocation, mid-exit. The cost is never just financial. It is the trust of the people the equity was meant to reward in the first place.
If you enjoyed reading the insights, here are a few things we recommend:
And if this was valuable, subscribe to our newsletter to receive future insights on equity management, cap table governance, and compensation strategy directly in your inbox.
What’s the Equity Matters newsletter? Created by the Qapita team, each issue breaks down one small but powerful insight on equity management, cap tables, and ownership strategy for growing companies.
About us: Qapita is an equity management platform that helps companies design, manage, and scale ownership structures with clarity and control. Manage cap tables, fundraising, share issuance, equity awards, 409A valuations, and liquidity globally - all in one unified platform. Qapita supports founders and finance teams automate employee equity workflows, stay compliant, and move faster with confidence from seed to IPO and beyond.
