July 2012

We are often asked to advise a Board or majority shareholder on arrangements to sponsor valued employees into acquiring a shareholding in a company.  The specific reasons for employee shareholding arrangements can include succession planning, a reward for loyalty and the contribution of the employee to development of the business or as an alternative to more traditional forms of bonus remuneration. The plan is generally to incentivise the employee to help maximise company profitability and receive a potential bonus by dividend and potential capital growth for the shares held.  However, if not structured correctly, the intended golden handcuff can end up...