Employee share schemes are popular as they are good for recruiting, creating loyalty, reducing salaries and can be tax efficient.

Reasons to work with us

• We specialise in guiding private company employers to the right type of share incentive plan for them. We also handle the tax issues and legal issues which will arise.
• We are very well versed in the tax rules and tax implications of all the available schemes and the very real tax traps and pitfalls. This helps at the key planning stage.
• Experience enables us to anticipate key issues that will arise not just upon implementation but also later down the line such as when an employee or director leaves or if there is a share sale
• There are usually plenty of choices and we guide employers on what is likely to work for their business. Experience is invaluable as it means the service is fine tuned and focused.
• Our experience spans from share awards for private companies, share options, work for international groups and larger companies.

Types of employee share plans we advise on

Most of our instructions are for :-

• EMI – Enterprise Management Incentives
• Growth Shares
• CSOP
• SIP – Share Incentive Plan
• SAYE- Save As You Earn

Key considerations

Awarding shares to employees is a big step which does require some thought.  If the objectives are unclear it is possible to over look the bigger picture.  The usual end game is what benefit should the employees receive under the award of shares if the business is sold? The type of questions to consider include:

• Extent of participation – The directors of the employer awarding shares need to decide who do they want to provide the benefit to? Many HMRC tax advantaged plans, e.g. EMI, can be granted on a selective basis.
• How much equity to give away – The choice on how much to give away rests with shareholders. 
• Performance conditions – there is plenty of discretion on this point and no legislative requirements.
• Share options and conversion terms – You need to decide what happens on reaching milestones such as years of service, financial targets, sale of the business, demerger or reconstruction, voluntary arrangement/administration order.
• What happens if an employee ceases to be employed? – Should special provision be made for death, injury, disability or redundancy?  Good/bad leaver provisions are important. If there is a departing employee who holds shares these can be bought back by the company and either cancelled or held in treasury to be recycled for further share awards.
• Are the employees paying for the share award? – there are no fixed rules. Shares can be gifted for free.
• How will the shares be sourced for the employee share incentive? – will they be newly issued which dilutes existing shareholders or if existing shares are being used it is usually necessary to consider the tax position of the transferors.
• Are the existing articles and/or shareholders agreement adequate?