BIS guidance on employee shareholder status

Walker Morris has previously described the government’s new ‘shares for rights’ scheme and the opportunities it may present for the private equity community. Some aspects of the scheme were still a little unclear as at 1 September 2013, hence the government’s attempt at clarification through its guidance.

In reality, the guidance does not tell us much that we did not already know. One point, however, is worth noting.

It is clear from the legislation that the company issuing shares may not receive any other form of consideration from the employee other than the renunciation of certain of his or her statutory employment rights identified in the legislation. The Business, Innovation & Skills (BIS) guidance states that the requirement that the shares be issued fully paid means that companies will, in the majority of cases, have to issue those shares by way of capitalisation of distributable profits…

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