What types of equity can I offer as a non-US incorporated company?

Navigating equity compensation for non-U.S. incorporated companies can be a complex task, especially considering the multitude of available equity types.

The table below offers a concise overview of essential terms and security categories relevant to international equity plan management and Carta’s onboarding spreadsheet:

Term	Description
International (INTL)	This equity type is Carta terminology used when there is no predetermined country-specific regulation for classification of stock options. For countries that do not have a specific classification of stock options or differentiated tax treatments for equity awards, INTL is used to designate the stock options. *Typically used for companies in Singapore, Australia, Indonesia, Malaysia, the Philippines, etc.
Company Share Option Plan (CSOP)	The CSOP is a discretionary tax-advantaged option plan that allows a company to grant options at market value to any employee or full-time director. Gains realized by grant recipients are typically exempt from income tax and national insurance if certain conditions are met. *Used for UK-incorporated companies
Enterprise Management Incentives (EMIs)	A tax-advantaged employee option plan scheme for companies with 250 or fewer employees. No income tax or national insurance is payable when EMI options are granted at market value and other qualifying conditions are met. *Used for UK-incorporated companies
Section 102	Section 102 of the Israel Tax Ordinance lays out three different options—or “tax routes”—for how and when equity-based compensation awards to employees and company officers are taxed. *Used for Israel-incorporated companies
Capital Gains Track	This track requires that the company nominate a trustee to hold grants for two years, after which the grant’s income is taxed at capital gain rates (for private companies) or a combination of capital gain and regular income tax rate (publicly-traded companies). As long as the grant remains with the trustee for the entirety of the holding period, it is taxed only when shares are sold. *Used for Israel-incorporated companies
Ordinary Income Track Trustee or Non-Trustee	This track taxes income from the grant as ordinary income when the shares are sold. Companies can choose this track with or without appointing a trustee, but if the shares are not held by a trustee, the company must guarantee sufficient funds to cover taxes when the shares are sold. *Used for Israel-incorporated companies
3(i)	Grants to anyone not eligible to receive grants under Section 102 (typically non-employees) will fall under Section 3(i) of the Israel Tax Ordinance. Section 3(i) grants are taxed as ordinary income when the shares are issued or options are exercised, and as capital gains when the shares are sold. *Used for Israel-incorporated companies
Startup Concessions	Tax-advantaged employee share scheme (ESS) options for eligible early-stage startups. Employees are not generally taxed at grant or vesting; tax is deferred until sale of shares after exercise, usually as capital gains. Who qualifies? To qualify for the startup concession, several criteria must be met, including: Australian resident company: The company must be an Australian resident and not listed on any stock exchange Company age and size: The company must be less than 10 years old and have aggregated turnover of less than $50 million AUD Market value pricing: ESS options must be issued at or above market value (for options, the exercise price must be at least the current market value of the shares on the date the option is granted) Employee ownership limit: The employee must not hold more than 10% ownership or voting rights in the company at the time of grant. Employees must hold ESS interests for at least 3 years. Business restrictions: The company's main business cannot be the acquisition, sale, or holding of shares/investments Tax Treatment No tax at grant or vesting: Employees defer tax until they sell the shares (after exercising the options) Capital gains treatment: When shares are sold, gains are typically taxed as capital gains, which may qualify for the 50% CGT discount if held for more than 12 months *Used for Australia-incorporated companies and Australian citizens/residents only.
Non-Concessional	Standard employee share scheme options that don't qualify for startup concessions. Different tax rules apply depending on the scheme design, such as taxing at vesting or exercise rather than at sale. Who can use this? Companies that don't meet startup concession criteria: Including companies over 10 years old, with turnover above $50 million, or whose main business is investment/acquisition Any Australian company: Broader eligibility for companies at any stage Flexible tax treatment: Can be structured for different tax outcomes based on company needs Tax Treatment Tax treatment varies based on scheme design: Taxed at vesting: Employees may be taxed when options vest (before exercise) Taxed at exercise: Employees may be taxed when they exercise options (acquiring shares) Discount calculation: Taxable amount is typically the discount between market value and what the employee paid No capital gains deferral: Unlike startup concessions, tax cannot be deferred until share sale *Used for Australia-incorporated companies and Australian citizens/residents only.
Zero Exercise Price Options (ZEPO)	Zero-Exercise Price Options (ZEPO) are ESS options where the exercise price is set at $0 (or a nominal amount like $0.01). This means employees can convert their options into shares without paying an exercise price. Who uses ZEPO? ZEPO structures are commonly used by: Later-stage companies: Companies that have raised significant capital and want to minimize cash burden on employees PE portfolio companies: Private equity-backed companies offering equity to management teams Enterprise companies: Larger organizations with mature equity compensation programs How ZEPO works No exercise cost: Employees convert options to shares without paying an exercise price Simplified economics: Employees receive the full value of shares (minus any tax obligations) Can use startup concessions or non-concessional: ZEPO can be structured under either ESS framework, depending on company eligibility Tax Treatment Tax treatment depends on whether ZEPO qualifies for startup concessions: If using startup concessions: Tax deferred until share sale Taxed as capital gains (with potential CGT discount) Must meet all startup concession criteria If non-concessional: Typically taxed at vesting or when options become exercisable Taxed as ordinary income on the market value of shares No capital gains deferral Why companies choose ZEPO Remove cash barrier: Employees don't need to find cash to exercise options Simpler for employees: Easier to understand than traditional options with exercise prices Attractive for retention: Employees receive full share value without upfront investment *Used for Australia-incorporated companies and Australian citizens/residents only.

Creating custom securities attachments from the drafting spreadsheet