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Employee Share Schemes and Incentives
A company may wish to consider putting in place a share scheme for its employees for a variety of reasons, such as providing rewards and incentives to employees, as well as allowing them to obtain and sell shares in the company in a tax-efficient manner.
JMW’s corporate team has a wealth of experience in advising many different companies, with the future plans and exit strategy always at the forefront of its mind, on putting in place bespoke share schemes and incentives to ensure that client’s long term goals are achieved.
Find out more about how the corporate team at JMW can assist with establishing employee share schemes and incentive schemes by calling us on 0345 872 6666. You can also complete our online enquiry form to request a call back at a convenient time.
How JMW Can Help
We have experience advising on implementing the following schemes:
- Enterprise Management Incentives (EMI schemes)
- Employee Ownership Trust (EOTs)
- Company share option plans (CSOPs)
- Employee Benefit Trusts (EBTs)
- Bonus schemes
The corporate law team at JMW Solicitors is an expert at structuring and implementing HMRC-approved Employee Share Schemes, and works closely with specialist share valuation departments at leading accountants.
How Does an Employee Share Scheme Work?
A company may wish to consider share schemes for its employees for a variety of reasons, such as:
- To encourage an employee to remain with the company until a key defined target or objective is achieved, such as performance targets, a sale or listing
- To reward employees ahead of a potential sale for their loyalty
- To permit employees to obtain and sell shares in a tax-efficient manner over a period of time, helping to increase motivation and performance
Before entering into any share schemes, shareholders should ask themselves whether they would be content to extend share ownership, and should be fully aware of the implications of doing so. For example, they may require legal guidance on the effect of granting voting and dividend rights, and also any potential issues arising from minority shareholder rights.
What are the Different Types of Share Scheme?
Employee share schemes can involve the donation of free shares to employees, granting them options to purchase shares at a predetermined price after a fixed period or after achieving agreed targets, or matching employee purchases of shares with those offered for free or at a discount.
Employee share schemes should be tailored to match the specific needs and goals of the company. For example, they may:
- Award shares or grant options dependent on achieving a certain defined target or objective
- Permit employees to become shareholders only upon the sale or flotation of the company
- Limit the scheme to certain key employees
- Require an employee to have served a certain number of years of service
It is possible to run a combination of various employee share schemes and/or provide more favourable terms for different categories of employees.
Talk to Us
If you are looking for expert support on the legal process surrounding employer share schemes and incentives, contact JMW today. Call us on 0345 872 6666 or complete our online enquiry form and we will contact you.