- Will a share scheme benefit my company?
There is a variety of independent research showing a strong positive connection between employee share ownership and improved company performance. This includes research into EMI option schemes, SAYE options and Share Incentive Plans (SIPs) by HM Revenue and Customs, which found (amongst other things):
79% of companies with EMI option schemes believed they had improved staff motivation and helped them retain key or skilled employees, with 71% believing their EMI options had improved company performance; and
A majority of companies with an SAYE option scheme believed it had improved productivity and half of companies with a SIP saw a productivity improvement.
There is also a large body of academic research into the impact of employee share ownership schemes. These tend to show that companies operating employee share ownership schemes (or employee share ownership plans as they are called in the USA) tend to outperform their peers if managed in ways which encourage employee participation in decision making.
- Do we need an all employee share scheme or one for our key people only?
The priority for many companies is to create a share scheme for their key people. Others take the view that expanding share ownership more widely will have a greater positive impact. Your own approach is likely to depend on your business, the profile of your employees and how many shares are available for use in your share scheme.
An all-employee scheme is likely to need more administration, although if you wish this can be outsourced.
- How do I work out what sort of share scheme is best for my company?
This will need some advice. There is no completely off-the-shelf solution, although most share schemes use the same building blocks.
- The shares in my company aren't listed. How can employees turn them into cash?
If your company's shareholders are working towards an exit (sale or flotation) that could be made the target for when employees can sell their shares. If you have no specific exit plans, you may need to consider arrangements allowing employees to sell their shares internally.
- Does our share scheme need shareholder approval?
We will tell you if this is needed or adviseable. In some cases you will need your shareholders to approve the launch of a new share scheme but it won't always be necessary.
- Are there any tax incentives?
Yes, in the UK there are tax incentives for both your company and your employees, although your share scheme will need to meet some precise requirements to secure income tax reliefs.
- How long will it take?
Your share scheme could be up and running in weeks, or sometimes even days, if you need it urgently. However, it is better to plan carefully if time allows, and a time frame of two to three months is typical - a little longer if you choose a Revenue-approved share scheme carrying income tax benefits.
- Why choose us to help you create your share scheme?
If you choose us, it's likely to be because you want the design and setting up of your company's share scheme to be entrusted to acknowledged specialists, with the quality
assurance that comes from appointing a regulated solicitors firm, and because you are confident and comfortable in dealing with us. We pride ourselves on delivering a
client-friendly and personal service and our ability to demystify the issues. At the same time, as solicitors we have the expertise to ensure compliance with all the relevant
company law, employment law and taxation issues that may apply to your share scheme. But we think you'll want to talk to us to decide for yourself, so do please
contact us if you would like to arrange a meeting or to discuss your situation by telephone or email.
- How much does it cost?
We don't charge for an initial discussion or meeting. Once we've then helped you identify a potential solution, we will confirm to you the cost of you engaging us to advise
you on more detailed design and implementation. We are normally able to quote a fixed cost but should this not be possible we will aim to provide a cost range with a top limit.
We have built our success on our ability to deliver excellent service at costs noticeably lower than those charged by many larger law firms, accountants and consultants.
This is just one of the ways in which we believe our service meets the needs of the private and smaller listed company.
- Will our share scheme need to be professionally administered?
For most share schemes involving a small number of employees only, we think administration will be straightforward and that it will be most cost-effective and practical
for you to do this yourself. For an employee share scheme involving larger numbers of employees, you may want external help, in which case we can arrange that as part
of our service. The one area where you may need some continuing assistance is filing an annual return for your share scheme with HM Revenue and Customs, and we will
also be happy to assist with that.
- Does my company need to set up an employee trust?
A trust can sometimes be useful as a warehouse for a company's shares where it wishes to operate an internal share market or arrange for the purchase of shares from a
departing employee. In a limited number of other cases (including where your chosen share scheme is a SIP), an employee trust (or employee benefit trust) may be an
important component in your share scheme. However, we think that in the majority of cases you will not need to set up an employee trust.
- Is an employee share scheme the same as an employee share plan?
Yes, the only difference is that in the UK we tend to use the phrase employee share scheme whereas in the USA and North America the preferred term is employee share plan. Other terms with the same or similar meanings are included in the Glossary
