Member Article

The Department for Business, Innovation and Skills (BIS) has published guidance on employee shareholders. This guidance is quite useful and sets out the following 6 conditions which need to be met in order to become an employee shareholder:

1. The individual and the company must both agree that the individual will be an employee shareholder.
2. The employer must give the individual fully paid up shares in the employer’s company or employer’s parent company, and they must be worth at least £2,000.
3. The individual must not pay for the shares in any way.
4. The employer must give the individual a written statement of the particulars of the status of employee shareholder.
5. The individual must obtain advice from a relevant independent adviser on the terms and effect of the written statement. The company is required to pay for that advice whether the individual accepts the job or not.
6. The individual cannot accept or agree to an employee shareholder job until 7 days have passed following receipt of the advice. The 7 days commence on the day after the advice has been received.

For those with an interest in the mechanics of issuing the employee shareholder shares… the guidance has indicated that “in the majority of cases the shares will have to be paid out of distributable reserves” which may present difficulties for certain companies. Employers who are considering offering the employee shareholder status to their workforce should careful consider the practical implications for doing so.

The rest of the BIS guidance on employee shareholders can be accessed here: https://www.gov.uk/employee-shareholders