His scenario was the company raises at 10M and afterwards gives 1% of it's shares to the employee. Actually I think most countries would treat that as taxable income which is why companies usually give options not shares once they get going.

That is still not a taxable event. Even if it's shares and not options.

The shares won't be taxed until they are sold.

I know this, because I've worked in an Australian company and been given shares and they made no difference to my tax liability.