Treasury Shares

Treasury Shares

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We have a client company (small, 4 employees, 2 director shareholders) that wishes to give shares to the employees on an increasing scale on a length of service basis, with the intention that the employees will end up with 20% of the share capital, the caveat is that if the employees leave the shares revert to the company. I'm thinking Treasury Shares, in terms of BIK do I have to value the company each time there is an issue of shares, its one for each share after 5 years of service up to 15 years of service each.  Thanks

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By David Heaton
11th Mar 2020 15:02

You should take advice from somebody who deals with employee share schemes. The company needs constitutional documents that support the plan, it needs to work out, eg, where the shares will come from, how it will value the shares, and how it will reacquire (or cancel) the shares, distinguishing between 'good' and 'bad' leavers, plus a multitude of other considerations, including tax relief for the company, and tax charges for the employee recipients (including where the arrangement is structured as an EMI or share incentive plan). This is not something that you can learn about from a web forum, and it's easy to make mistakes in such a complex area.

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Replying to David Heaton:
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By CW2012
12th Mar 2020 09:48

Thanks David I fear that you may be right and that a little knowledge is a dangerous thing.
I will get in touch with someone more specialist.

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