The following case studies are summaries of some of our recent assignments. They are all real projects but have been anonymised for confidentiality reasons.
The founders of a recently established, but already very profitable, internet technology company wanted to design and implement a share option plan for their key people, mainly developers. We recommended that they create an EMI option plan; helped them confirm that the company was eligible for EMI; guided them through the design process (questions included when should the options be exercisable? and what happens if an optionholder leaves); produced all the plan documents; agreed a starting share valuation with HM Revenue and Customs and helped the company’s directors explain to participants how the options worked.
A fully listed technology company wanted to establish a plan for its new Chief Executive. The company was not eligible for EMI options, and we devised a joint ownership plan under which the Chief Executive was awarded an interest in the growth in value of the shares, so qualifying for capital gains tax treatment in respect of future growth. As well as implementing the arrangement, we advised on responsibilities under the Listing Rules and the disguised remuneration anti-avoidance provisions.
The London office of a US law firm was acting on the takeover of a UK listed healthcare company. The target company had a number of share schemes, and we advised on how to structure the takeover in compliance with scheme participants’ rights. This included guidance on the bidder’s obligations under the Takeover Code, the bid timetable, the impact of the deal structure (a scheme of arrangement) on scheme participants’ rights, and drafting communications with employees.
Our client was joining a new company as its Chief Technology Officer. He had been promised a specified amount of equity in the company as part of his package but the company had not considered how to arrange this without him incurring a significant tax bill. We helped him to work out a structure to put to the company, and once it had been approved by the company we carried out the legal implementation.
The directors of a financial services company were concerned that they had promised equity to employees, but that with a takeover under discussion nothing had been done to implement this commitment. Working closely with a valuation specialist, we assisted the company in arranging for employees to acquire shares of a kind that would enable them to benefit from most of any takeover premium without needing to make a substantial personal investment, at the same time avoiding a significant tax charge if the deal did not go ahead.
A company with its head office in continental Europe wished to extend its existing option plan to its employees in the UK, with the remit that the arrangements must be as tax efficient as possible. Having analysed the rights and restrictions attaching to the company’s shares and the terms of the existing share plan, we were able to advise that options granted to UK employees could qualify as Enterprise Management Incentive (EMI) options if a few adjustments were made to the existing share plan in respect of UK employees. We drafted a UK variant of the company’s option plan under which UK tax-favoured EMI options could be granted.
A tax partner in this firm had advised one of its company clients to establish a growth share arrangement for its Chief Executive, and had provided related advice on taxation. The firm asked us to look after legal implementation. We prepared the necessary amended Articles of Association, Share Subscription Agreement, Companies House filings and an explanation for the Chief Executive of how the arrangement worked.
The owner of a consulting engineering company wished to retire and sell his shares to an employees’ trust. We advised on structuring the transaction, how it would be funded by the company, obtained clearances from HM Revenue and Customs, produced all legal documents, provided all necessary taxation advice, and assisted the company’s owner in explaining the new structure to its employees.
