On 18 March 2026, the European Commission proposed “EU Inc.”, a new optional EU-wide corporate structure designed to simplify cross-border operations, boost competitiveness, and support startup growth through a harmonised set of corporate rules. A key feature is the introduction of EU employee stock option plans (EU-ESOs), which would allow companies to grant portable stock options across EU member states and defer taxation until the shares are sold, helping employees avoid “dry tax” on unrealised gains. The proposal would significantly change the treatment of share options in countries like Ireland by aligning EU-ESOs more closely with Ireland’s Key Employee Engagement Programme, and it is now under review by the European Parliament and Council with a target agreement date by the end of 2026.

Slovenia has introduced a new legal employee ownership model (effective 2026) that lets employees collectively buy and hold company shares through a cooperative structure, mainly to support business succession and employee ownership. The model is designed to keep upfront employee costs low by using financing options like loans or seller support, while offering tax incentives to encourage adoption. It aims to preserve businesses and increase employee participation, with a more direct and democratic structure than many existing employee ownership systems.

Employee equity incentives such as ESOPs, stock options, and RSUs are widely used across Asia Pacific and the Middle East to align employees with company performance and support long-term retention. However, implementing these plans is complex due to fragmented legal and tax frameworks that vary significantly by jurisdiction, including multi-layered regulations in China, India, and the UAE. The guide highlights key legal and tax issues employers must navigate—such as governance, taxation, valuation, and leaver treatment—when designing and managing cross-border equity incentive plans.

The Squire Patton Boggs report on “Hot Employment Law Topics for 2026” highlights that a central global theme is ongoing regulatory “change,” with many jurisdictions introducing new employment laws that generally increase worker protections and expand employer obligations. Key focus areas include pay transparency and pay equity requirements, growing AI and technology regulation in the workplace, and stricter rules around compliance, data protection, and employee rights. Overall, the report emphasises that employers should expect higher legal, financial, and compliance risks in 2026 and will need to proactively adapt policies and workforce practices to keep up.

Employee Stock Ownership Plans (ESOPs) are governed by the strict fiduciary rules of Employee Retirement Income Security Act, which prohibit plan assets from being used to indemnify sellers, trustees, officers, or other parties because doing so would violate the exclusive benefit rule and participants’ retirement interests. Indemnification would also create prohibited transactions and fiduciary breaches, exposing trustees and other parties to significant legal and financial penalties. Instead, ESOP transactions use alternative risk-allocation tools such as company indemnities, representation and warranty insurance, seller-funded escrows, and purchase price adjustments to remain compliant while protecting employee benefits.

Section 6039 of the Internal Revenue Code requires companies to provide Forms 3921 and 3922 to employees who exercised incentive stock options or first transferred ESPP shares during 2025, with employee statements due by February 2, 2026. Employers must also file these forms with the IRS by March 2, 2026 (paper) or March 31, 2026 (electronic), with electronic filing mandatory for companies submitting ten or more forms of a given type. Failure to file or furnish the forms on time can result in significant per-form penalties, making timely compliance critical for corporations administering equity plans.

Over 50 major UK companies, including Vodafone, Diageo, and Wickes, have urged Chancellor Rachel Reeves to make it easier for employees to buy shares in their employers by reducing the mandatory five-year holding period on Share Incentive Plans (SIPs) to two years. They argue that shorter holding periods would increase participation, giving workers a stake in their company while also helping firms attract and retain talent. The move aligns with the Government’s broader goal of encouraging ordinary people to invest and creating a more financially engaged workforce in the UK.

Practitioners advising on Irish employee and executive share schemes have been warned to exercise caution after the Law Society highlighted evolving anti-money laundering (AML) guidance. Under Ireland’s Criminal Justice Act 2010, nominee companies holding shares on behalf of employees may now be considered trust or company service providers (TSCPs), requiring authorisation from the Department of Justice. While the law hasn’t changed, the shift in AML practice means employers and advisors must carefully review nominee arrangements to ensure compliance and avoid potential offences.

The Budget made contrasting changes for employee ownership, reducing the capital gains tax relief for shareholders selling to Employee Ownership Trusts (EOTs) from 100% to 50%, which could disadvantage those mid-sale and dampen enthusiasm for EOTs. Conversely, reforms to Enterprise Management Incentive (EMI) share option schemes were welcomed, with expanded eligibility, higher thresholds, longer option terms, and reduced administrative burdens, making EMI schemes more attractive for companies and employees. The inconsistency—cutting incentives for full employee ownership while enhancing tax advantages for EMI share options—has drawn criticism for sending mixed signals about the government’s support for employee ownership.