Employee share ownership schemes have been the subject of increased attention in Ireland recently, with the country’s very first Employee Share Ownership Day taking in place in Dublin in June.
The conference was hosted by the Irish ProShare Association (IPSA) – a voluntary organisation that promotes the use of Employee Financial Involvement – and therefore was obviously very much focused on the benefits such schemes can bring.
However, while the introduction of an employee share ownership scheme can undoubtedly be a positive business decision for some employers, there are many practical considerations to be taken into account and possible risks to be assessed, and therefore it is never a decision that should be taken lightly.
If you are thinking about introducing such scheme to your company then professional legal and financial advice is essential to help you fully evaluate the repercussions for yourself, your business and your employees.
One of the most important decisions you will need to make when considering the introduction of an employee share ownership scheme is which type of scheme is best suited to your business. There are several different types of schemes available, each of which serves a slightly different purpose.
For example, you could choose to go for a scheme that links the provision of shares to employee performance, such as a Long Term Incentive Plan, where shares are granted when employees meet set performance targets.
Alternatively, there are Stock Option schemes, which give employees the right to buy shares at a future date at a fixed price.
Other types of schemes available include:
We can work with you to consider the advantages and disadvantages of the schemes available, in conjunction with your financial adviser, and help you decide which type of scheme is right for your business.
Introducing a share ownership scheme can be a sound business decision, as long as this decision has been fully informed. Some of the benefits it could bring to your business include:
As well as deciding on the type of scheme, there are many practical considerations to be taken into account to ensure you end up with a scheme that works for you and your business, such as:
If you would like further information on any of the points raised or if you are considering making an employee a shareholder, then contact James Sherwin today and he can help you through the process simply and efficiently in conjunction with your financial advisor. We also recommend you fully examine the tax implications of any scheme.
We have found the Sherwin O’Riordan team to be reliable, very responsive in cases of tight deadlines, business focused and have given us sound commercial legal advice.Geoff Ryan - VP Finance, Profitero
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