Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Shares definition

What does Shares mean? In company law practice, a share is a unit of a member’s interest in a company, carrying the rights and obligations attached to its class (for example, voting, dividends and return of capital on a winding up). The Companies Act 2006 simply states that a share is a share in a company’s share capital; the Irish Companies Act 2014 adopts a broadly equivalent approach. Usage and effect are consistent across England & Wales, Scotland, Northern Ireland and Ireland. A company’s share capital comprises the number of shares it allots and issues to investors on or after incorporation. Those...

Employee share schemes in UK private companies: legal and practical considerations on EOT/EBT, EMI/CSOP/SIP, valuation, dilution and control, leavers, Articles of Association, FSMA and corporate governance.

Published by a LexisNexis Share Incentives expert

Practice notes

Private and unlisted companies encounter distinctive challenges when rolling out employee share schemes. Chief concerns are the absence of a ready market for shares and the difficulty of valuing them. Businesses must also consider amendments to their Articles of Association and the knock-on effects for shareholders and external investors. This note sets out the essentials and shows how, with careful design and delivery, these obstacles can be overcome.

Perceived barriers to share plans in private companies

These include:

losing control of the company
no ready market for shares
a lack of awareness of the tax benefits associated with HMRC tax‑favoured arrangements
concerns about complexity and, therefore, the cost of establishing a plan

With the right advice and planning, these hurdles can be managed.

Why private companies use employee share plans

The Finance Act 2014 gave a major impetus to employee ownership through the introduction of the employee ownership trust (EOT), which offers tax advantages to company owners selling a controlling interest to a trust that would then hold shares on behalf of all employees. Since its introduction, the EOT...

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Sarah Anderson

Sarah has specialised in the design and implementation of employee share schemes for over ten years, largely advising private and smaller quoted companies across a variety of sectors. She has been lucky enough to work alongside some of the leading practitioners in the field, both in private practice and during a stint at the Office of Tax Simplification, when she helped formulate the OTS's recommendation for the simplification of tax legislation relating both tax-advantaged and non-tax advantaged share plans. In addition to her share scheme work, Sarah has also spent time providing advice both to public and private sector clients on broader tax issues. She also has some experience in charities law, education law and some aspects of business immigration. Sarah has a degree in English from Reading University and studied for the CPE and LPC at London Metropolitan University. Her interests include...

Web page updated on 21/05/2026

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