In an unprecedented move, the global hospitality giant Airbnb is planning to give a portion of equity to all of its hosts around the world. But this generous offer is not without several legal complications. The distribution of equity for American companies is regulated by the Securities and Exchange Commission (SEC), whose current regulation may not permit such distribution of equity amongst what are deemed as contractors. To add to this complication is the fact that Airbnb offers its services through hosts all around the globe, making it all the more difficult for an American corporation to hand out equity to a non-American workforce.
Airbnb has written a letter to the SEC explaining its intention and arguing for a change in the current regulation to allow a new class of shareholders who contribute through contractual employment. The company explained in its letter that its success depends on the success of its hosts and providing equity to such gig economy participants would provide greater incentives which would be beneficial to both the hosts and Airbnb.
The current laws stipulate that any private corporation with 500 or more shareholders who do not have a United States accreditation must be registered. But Airbnb, valued at $31 billion has over 5 million hosts listed in 80,000 cities in over 190 countries around the globe. Airbnb seeks additional provisions from the SEC since accreditation and equity distribution to so many “employees” is legally impossible under standard practices.
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