BUSINESS OBJECTIVES ACHIEVED
Our Corporate lawyers have the expert knowledge and experience to support companies from all sectors in deciding whether employee ownership is suitable and on the process of becoming employee-owned. We can represent and guide both outgoing shareholders as well as incoming employees and trust companies through the transaction and in taking the necessary steps to move towards an EOT company structure.
The transition to an EOT model can seem complex and somewhat daunting at the outset, however, it is our goal to break down the process and make it more digestible for all parties involved. We will work with you, and the company, to understand your specific needs and provide tailored advice and assistance before, during and after the transition to an EOT.
Our services include;
An Employee Ownership Trust (EOT) is an alternative business ownership structure with specific benefits to both owners and employees. It involves the establishment of a new trust which holds a controlling interest (at least 51%) in the trading company, for the benefit of all of the employees in the business. The Trustee of the EOT may be an independent professional trustee company or a company incorporated to act as the trustee, made up of directors from within the workforce as well as independent parties.
There are currently over 600 EOTs existing in the UK. Prominent Company founders have commented that amongst their reasons for selling partial shareholdings into an EOT were;
The John Lewis Partnership has the largest EOT model in the UK. More recent corporates to become EOTs are hi-fi retail business Richer Sounds, with Julian Richer, Founder and MD of Richer Sounds transferring 60% of his shares into an EOT, and organic food retailer Riverford Foods, with founder-owner Guy Singh-Watson transferring 74% of his shares into an EOT.
Leading forecasters have shown that the number of EOTs is increasing at a rate of 40% per annum. With many market leaders choosing this route of succession, there has been a notable spark in the level of interest in this model, and whether or not it could be viable for smaller businesses also.
For business owners; when the EOT acquires the majority of a company's issued share capital, the outgoing members can claim exemption from capital gains tax (CGT) on gains made after disposal of their shares. Furthermore, it is possible to seek advance clearance from HMRC, providing certainty on the tax position.
For employees; qualifying employees of a company may receive income tax-free bonuses of up to £3,600 per person, per annum.