Stephen Diosi
Stephen leads the Employee Incentives team at Mishcon de Reya. He has significant experience advising on the strategy, design, implementation and compliance of UK and global employee incentive arrangements, including long term incentive plans, all-employee share plans, HM Revenue and Customs tax-advantaged plans, management incentive plans and growth share and joint ownership plans. Stephen also advises on all related corporate, tax and trusts aspects, corporate governance issues, disclosure of directors' remuneration and share dealing regulations.
In addition, Stephen works with companies on the impact that corporate actions have on their incentive arrangements and has acted on many public takeovers, mergers and acquisition, public to private transactions, initial public offerings, capital raising activities and private equity deals.
Stephen also advises on contractual disputes and tax investigations relevant to incentives arrangements.
Stephen works with a wide range of businesses across several industry sectors, including financial services, natural resources, entertainment, aerospace and transport and for companies that are listed on the London Stock Exchange, AIM and overseas exchanges, together with private equity houses, private companies and owner-managed businesses.
Stephen is a contributor to Volume 14(1)B Employment of the Encyclopaedia of Forms and Precedents.
Practice Areas
Panels
- Consulting Editorial Board
- Contributing Author
- Other Publications
Qualified Year
- 2000
Membership
- Share Plan Lawyers Group
- Employee Ownership Association
Education
- Cardiff University/Prifysgol Caerdydd Bachelor of Laws (LLB), Law (1994-1997)
5 Contributions by Stephen Diosi
PRACTICE NOTES
Employee share plans in UK equity fundraisings: rights issues, open offers and placings—option and LTIP adjustments, SIP and EBT mechanics, and HMRC tax treatment
A business might need to secure extra capital for a variety of purposes. It could, for example, be to finance a planned acquisition or to satisfy continuing financial commitments. There are several routes by which a company can obtain the extra funding required, including tapping existing shareholders through a rights issue, an open offer or a placing.
When running a rights issue, open offer or placing, the company must carefully assess the effect on any current employee share plans it operates. This assessment should take place as early as possible in the decision-making process to determine whether, and if so what, steps can be taken so that employees are not put at an unfair disadvantage by a rights issue, open offer or placing. This Practice Note outlines the key points that typically arise in connection with employee share plans on a rights issue, open offer or placing, the steps that will usually need to be taken in relation to outstanding options and awards, and the relevant tax treatment.
What are rights issues, open offers or placings?
In a rights issue, the company offers shareholders the chance to subscribe for additional shares on a pro rata basis relative to each shareholder’s...
Share Incentives
PRACTICE NOTES
UK IPOs: Managing Employee Share Incentives—Existing Plans, New Schemes, Prospectus Disclosures, HMRC Valuations, Employee Offers, Lock-ups, Corporate Reorganisations and Communications
Introduction
An initial public offering (IPO) is a company’s first sale of shares to the public. For more on what an IPO entails, see: IPO—Main market—overview. A business heading towards an IPO must assess the effect on any employee share arrangements it runs. This analysis should begin at the earliest planning stage, as the IPO structure may need to reflect share plan considerations. An IPO also creates a chance to launch new share schemes—often extending participation to all staff for the first time—and it is usually best for those arrangements to be established before the company’s shares are officially admitted to trading. Organisations may likewise wish to make awards or run an employee offer at the point of listing. Doing so demands advance preparation, with suitable disclosures built into the prospectus. This Practice Note outlines the key points that typically arise on employee incentives in an IPO and the steps that are commonly required. It covers both current and newly introduced schemes, points of timing ahead of admission, and how any grants or employee offers align with prospectus disclosures, ensuring the overall flotation approach accommodates share plan features and operational practicalities. This Practice Note does not address matters that will arise...
Share Incentives
PRACTICE NOTES
UK Phantom Share Awards, Phantom Options and Share Appreciation Rights (SARs): Legal, Tax, Accounting, Valuation, Regulatory and Implementation Considerations
What is a phantom award?
In essence, phantom awards fall into two main types: phantom share awards and phantom options.
Phantom share awards
A phantom share award gives the holder a right to a cash sum mirroring the value of an actual share. These arrangements are also known as ‘shadow shares’, ‘synthetic shares’, or ‘equity appreciation units’; for simplicity, this note calls them ‘phantoms’ and ‘phantom share awards’.
Phantom options
A phantom option typically entitles the holder to the increase in the value of a real share above a notional exercise or base price.
Practical example
BigCo Limited is a rapidly expanding private UK company seeking to launch an incentive plan that allows all employees to participate and share in any future growth of the business. Its investor base, however, is reluctant to issue actual shares to employees, as that would dilute the current investor shareholders. By granting phantom awards to its workforce, BigCo Limited can provide employees with a right to a cash amount equal to the difference between the value of BigCo Limited shares. In this way, employees participate in the company’s growth without new shares being issued, and existing investor shareholders avoid dilution of their current holdings...
Share Incentives
PRACTICE NOTES
US LLC incentive arrangements: UK tax treatment for UK-resident members, including profits and capital interests, unit plans, options and double taxation relief post-Anson
What is an LLC and how is it different to other forms of business organisation?
A limited liability company (LLC) is a legal form of business organisation in the US. It is essentially a hybrid structure, blending characteristics of a corporation and a partnership together. Comparable to a UK private limited company, it grants owners limited liability protection, whilst, subject to elections made by the entity, it may potentially be treated as fiscally transparent for tax, much like a partnership.
Where an LLC is regarded as, or elects to be, tax transparent, all profits and losses flow directly to its owners—who are members rather than shareholders—and tax is therefore charged on the members instead of the entity itself.
Nonetheless, despite the potentially advantageous tax position of LLCs, the treatment of LLC members for tax across different jurisdictions is not always simple in practice. By way of example, the taxation of UK LLC members and income arising to the LLC in the UK is considered below. Outcomes can depend on local law and any elections made by the particular entity. The discussion that follows addresses these issues.
Why are LLCs used as a form of business organisation?
LLCs are favoured as...
Share Incentives
PRECEDENTS
Phantom Share Plan: Deed of Grant of Units (Award Agreement) with Vesting, Transfer and Tax Provisions (England and Wales)
This Deed is made on [ insert date ].
Parties
[ Insert name of company ] with company number [ insert company number ], whose registered office is at [ insert address ] (the Company).
[ Insert name of participant ] of [ insert address ] (the Participant).
Background and interpretation
The Company has set up the [ insert name of plan ] (the Plan).
The Participant is an Eligible Employee, and the Company intends to grant an Award to the Participant under the Plan.
Expressions defined in the rules of the Plan (the Rules) (but not defined in this Deed) carry the same meanings in this agreement unless the context dictates otherwise.
This agreement is executed as a Deed. This agreement is SUPPLEMENTAL to the Rules. If there is any ambiguity or inconsistency between this agreement and the Rules, unless the Rules state otherwise, the Rules shall take precedence...
Share Incentives
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