Employee share schemes are a common feature in many leading and ambitious companies who understand that their people are at the heart of their business and are their greatest asset. They are generally used to retain key staff and incentivise them to help grow the business.
The schemes often fall into three distinct categories:
- HMRC approved tax advantaged schemes such as Enterprise Management Incentive (EMI) options – whereby employees are given options to acquire shares in their company in a tax friendly manner.
- Non approved schemes including growth shares – again, employees are given shares in their employee company, but those shares only carry entitlement to participate in the growth of the company over a certain threshold.
- Employment Ownership Trusts – this is the modern ‘John Lewis’ scheme of moving the full company into employee ownership through investment by a trust of which the employees are beneficiaries.
The decision of which category to choose will depend on the company’s long-term ambitions and whether they meet the criteria for the specific scheme. For example, certain businesses, such as law firms, are excluded from setting up an EMI scheme. We can advise clients at the outset as to the advantages and disadvantages, as well as any barriers, of each category to ensure you select the right option to give you the best prospects of success.
The corporate team at Harrison Drury has supported many clients from different sectors looking to retain and/or incentivise staff. Our expert knowledge is complemented by our separate specialists in employment law , and we often work collaboratively as a team for clients to ensure effective compliance with both employment regulations and corporate rules.
A selection of our work on employee schemes include:
- Assisting a national energy company on 3 separate EMI option schemes for staff.
- Setting up a growth share scheme for a growing food business valued in excess of £10 million.
- Advising EMI option holders in a sale of a large manufacturing company.
To speak to our corporate specialists please call us on 01772 258321 or make an enquiry below to see how we can assist you and your business.
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