Employee shareholder meaning

The employer and its advisers ought to reflect on the following matters: Preparatory steps From the employer, gather: a copy of the departing employee’s latest employment contract and any other documents setting out contractual terms (note: these might sit within a staff handbook) particulars of the employee’s contractual benefits pertinent details about the employee’s pension entitlements information on any shares/share options held by the employee; review the Articles of Association, any relevant shareholder agreement, and share scheme documentation. See also Shares and share options below Status of negotiations Will discussions occur directly between the parties, or via their respective legal advisers? How robust is the employer’s bargaining position? How credible are the employee’s existing or potential claims? For any dismissal, is there a fair reason and has a fair procedure been followed? Is the employer in repudiatory breach? What is the employer initially...

NOTE: This archived timetable outlines the usual sequence for a merger under The Companies (Cross-Border Mergers) Regulations 2007, SI 2007/297, before those regulations were revoked at the end of the Brexit implementation period... Background The European framework governing combinations between companies in different EEA member states stems from Directive 2005/56/EC, the Directive on Cross-Border Mergers of Limited Liability Companies (Directive). The UK gave effect to the Directive through The Companies (Cross-Border Mergers) Regulations 2007, SI 2007/2974, as subsequently amended by SI 2008/583, SI 2011/1606 and SI 2015/180 (together, the Cross-Border Mergers Regulations). Beyond setting out a merger mechanism, the Cross-Border Merger Regulations also regulate employee participation arrangements (see Employee participation arrangements below). The City Code on Takeovers and Mergers (Code) applies in the usual manner and on the normal basis where at least one party to the merger falls within the Code’s scope. The Takeover Panel (Panel) has issued a practice statement offering practical guidance on how the Code operates in cross-border merger scenarios. For more detailed information,...

The employee (and their adviser) should consider the following issues: Preparatory steps Gather: a copy of the employee’s most recent employment contract and any other documents setting out contractual terms (these might be found in a staff handbook) a P45 or the latest payslip details of the contractual benefits the employee receives relevant information about the employee’s pension benefits relevant details of any shares or share options held by the employee. Review the Articles of Association, any applicable shareholder agreement and share scheme documents. See also Shares and share options below copies of pertinent open correspondence and without prejudice communications between employer and employee Define the scope of the advice and reflect this in the client care letter/terms of business, i.e.: is the advice limited to the terms and effect of the settlement agreement (to satisfy the relevant condition regulating settlement agreements)? is...

In this issue: Corporate Governance New content HMRC Manuals tracker Useful information Dates for your diary Weekly highlights from other practice areas Corporate Governance Lion Finance Group PLC faces investor dissent over executive pay At this week’s AGM, Lion Finance Group PLC encountered pushback from investors on executive pay, with more than 22% voting against the Directors’ Remuneration Policy; nonetheless, the motion passed with a majority of votes cast overall. Under the refreshed Policy, the CEO’s base pay rises by 35% and will be held at that level for 2025–27; the company stresses this uplift trails both the average employee increase and profit expansion since 2022, and will stay fixed for the policy term. The updated policy also introduces a potential annual variable award capped at 200% of salary, reserved for extraordinary performance and triggered only when total shareholder return sits in the FTSE 250 upper quartile. The standard award still remains at 100% of salary...

Hinton and another (as joint administrators of Kession Capital Ltd) v KVB Consultants Ltd (Company Number 08723839) and others [2026] EWHC 785 (Ch) What was the background? Kession Capital Ltd’s joint administrators (the company being in administration) sought directions from the High Court, before Deputy ICC Judge Curl KC, invoking IA 1986, Sch B1, paras 53, 55 and 63. The step followed creditors’ rejection of proposals put forward under IA 1986, Sch B1, para 49(1). They asked the court to ‘hold the ring’ by keeping the company in administration until a Supreme Court appeal on another issue was determined, with a further meeting of creditors thereafter. Twenty‑six unconnected judgment creditors opposed the application. When administration commenced, the company was insolvent and not trading. Its move into administration came after enforcement action by a substantial judgment creditor, Mr Venkiteswaran. The administrators’ proposals adopted the objective in IA 1986, Sch B1, para 3(1)(c)—realisation for distribution to secured or preferential creditors—relying upon a preferential claim of £800 owed to the director...

In this issue Budgets, Autumn Statements and Finance Bills Company law, governance and regulatory matters New content Trackers Weekly highlights from other practice areas Budgets, Autumn Statements and Finance Bills Budget 2025 The Chancellor, Rachel Reeves, presented the government’s Budget on 26 November 2025. From a Share Incentives standpoint, the key update was: Employee ownership trusts: with immediate effect for disposals on or after 26 November 2025, capital gains tax (CGT) relief on qualifying transfers of shares to the trustees of an Employee Ownership Trust (EOT) falls from a 100% exemption to 50%. Draft legislation has been released for inclusion in Finance Bill 2025–26. Section 236H of the Taxation of Chargeable Gains Act 1992 will be amended so that, where the disposal relief conditions are satisfied, 50% of the gain is treated as a chargeable gain of the disposing shareholder for CGT. Business Asset Disposal Relief and Investors’ Relief will not be available for the...

With appreciation to other contributors from Squire Patton Boggs offices across its global network. Cross-border JVs There is no single, universal approach to structuring cross-border joint ventures (JVs) (ie where one or more JV participants are based outside the UK and intend to establish a JV outside the UK). The provisions of any contract must ultimately set out the parties’ commercial arrangement. However, many of the legal points highlighted in this and the related Practice Notes: Cross-border joint ventures—initial considerations, Cross-border joint ventures—management and control, and Cross-border joint ventures—termination may influence the choice of jurisdiction for the JV vehicle, as well as the commercial bargain itself, and should therefore be assessed as early as possible to give the JV the best chance of success. Even if a joint venture agreement (JVA) uses a familiar governing law, such as English law, creating a cross-border JV can produce unexpected and unfamiliar issues. Each issue is covered at a relatively high level, but definitive local legal advice should always be taken...

This Practice Note outlines the criteria an employer may apply when deciding how to engage an individual. It examines the main categories of employment status—employee, worker, and the self-employed or independent contractor—and also addresses employee shareholders, casual staff and those on zero hours arrangements, agency workers, apprentices, interns and volunteers. Employers should identify at the outset which status is intended—employee, worker or self-employed—as each attracts distinct rights and protections. Further, particular considerations arise where the engagement is casual or ‘zero hours’, or involves agency workers, apprentices, interns or volunteers. Employment status also determines how the individual is treated for tax purposes (see Practice Note: Employment status—why it matters). Errors can result in employment tribunal proceedings and exposure to tax liabilities. Ultimately, regardless of the label used, courts and tribunals will prioritise the true substance of the working relationship over the wording of any contract. Employee, worker, self-employed/independent contractor Employee shareholders Casual and ‘zero hours’ workers Agency workers Apprentices Interns and volunteers ...

What is a demerger? A demerger is a form of corporate organisation that separates businesses conducted by a company or group of companies, so that, following the demerger, the trading activities are run by independent management teams but remain, at least initially, under the control and ownership of all or any of the same shareholders as before. This approach is often undertaken in order to sharpen the management of discrete elements of the trading business, to ring-fence liabilities linked to particular trades, or to enhance shareholder value where the sum of the parts is considered greater than the wider conglomerate as a whole. There are several ways to carry out a demerger, including: an in specie distribution by way of a dividend of shares in the subsidiary being demerged to the parent company’s shareholders — typically the most straightforward route in practice a return of capital delivered as shares in the demerging subsidiary to the parent company’s shareholders a three‑cornered demerger, under which...

Archived: The ability to offer tax-favoured employee shareholder shares or ESS (commonly used in private equity company arrangements) has now been removed In the Autumn Statement 2016, the government confirmed that certain ESS-related tax reliefs would be withdrawn. The changes remove: The income tax and NICs relief applying to the first £2,000 of employee shareholder shares an individual receives The capital gains tax exemption in respect of all, or a portion, of ESS shares The provision ensuring that, when a company purchases employee shareholder shares from an employee shareholder, the consideration is not treated as a distribution in the shareholder’s hands The withdrawal of these reliefs applies to any employer shareholder agreements entered into on or after 1 December 2016. However, an individual who had obtained independent advice about entering an employer shareholder agreement before 23 November 2016 could still complete the agreement before 1 December 2016 and retain the beneficial income and CGT tax advantages...

Archived: This Precedent is for illustrative purposes only as it reflects the position up to 1 December 2016. The facility to issue tax‑favoured employee shareholder shares (ESS), frequently seen in private equity company arrangements, has now been withdrawn. In the Autumn Statement 2016, the government confirmed that the following ESS-related reliefs would be abolished: the income tax and NICs relief applying to the first £2,000 of employee shareholder shares allotted to an individual the capital gains tax exemption covering some or all of the ESS shares the rule ensuring that, where a company buys back employee shareholder shares from an employee shareholder, the price paid is not treated as a distribution in the shareholder’s hands These withdrawals apply to any employer shareholder agreements entered into on or after 1 December 2016. Nonetheless, any person who obtained independent advice about entering into an employer shareholder agreement before 23 November 2016 could still complete the agreement before 1 December 2016 and retain the...

Archived: The ability to offer tax-favoured employee shareholder shares or ESS (commonly used in private equity company arrangements) has now been removed In the Autumn Statement 2016, the government confirmed that the tax concessions linked to ESS would be withdrawn. The changes remove the following in respect of employee shareholder shares: income tax and NICs relief on the first £2,000 of employee shareholder shares allotted to an individual the capital gains tax exemption applying to all, or part, of those ESS shares the rule that treated consideration paid by a company on a buy-back of employee shareholder shares as something other than a distribution in the shareholder’s hands These withdrawals apply to any employer shareholder agreements entered into on or after 1 December 2016. However, where an individual had received independent advice about entering into an employer shareholder agreement before 23 November 2016, they could still complete the agreement before 1 December 2016 and continue to benefit from the favourable income...

If a business claims to hire and remunerate an individual with a wage to reduce the tax burden of the business itself or a director/shareholder, while the individual in reality undertakes no work and supplies no services, this would appear to constitute tax evasion. Where a solicitor knows this is happening, they should adhere to the procedures prescribed in the firm’s policy on preventing the facilitation of tax evasion in such circumstances...