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What is a secondary/mini market?
A secondary/mini market is a mechanism that allows shareholders of a private company to trade shares among each other at a price set by the company. The trades are done among the shareholders in an anonymous manner, and the company facilitates the share exchange. The mini market is not a stock exchange because:
The Benefit of a the Mini Market for Private CompaniesPrivate companies with employee ownership plans and no mini market have a serious problem related to the liquidity of the shares and the punitive tax treatments when selling the shares back to the company. Following is the explanation of how the mini market address these two problems:
The Mechanics and Process of a Mini MarketThe process for the mini market can be simplified by the six steps that are depicted in the following swimlane diagram:
Source: Created by AuthorHere is a brief description of the steps:
Points to ConsiderFollowing are some points that need to be taken into consideration when setting up a mini market for a private company:
How can a company introduce a mini market?To introduce a mini market, the company needs to take the following steps:
About the AuthorRamy Taraboulsi is the CEO of VeritableSoft Innovations Inc., the parent of LoyaltyOptions (https://LoyaltyOptions.com), the software product that manages all aspects of administration and accounting of stock-based compensation and employee ownership plans, including mini markets. Prior to founding VeritableSoft, Ramy held different executive positions including Chairman and CEO at SyncBASE, CIO at Insurance Bureau of Canada, VP - Internet Strategy and Development at Fidelity Investments, VP - Internet Strategy at Merill Lynch and Chief Systems Architect at Mercer Human Resources Consulting. Ramy has also held and is currently holding various directorship positions. Ramy is a Professional Engineer who holds an M.Sc. in Computer Science, MBA and he is a Chartered Financial Analyst (CFA). Ramy has been practicing different forms of martial arts for 40 years, and is currently actively practicing Karate. He also plays music and enjoys reading, writing and traveling around the world.