Winckworth Sherwood

UK 200 2013 position: 94

Employee shareholder agreements — the potential gains

Since September 2013, employee shareholder agreements have enabled companies to introduce a new type of employment status into their workforce.

By entering into an employee shareholder agreement, an individual will acquire employee shares (worth at least £2,000 at the time of acquisition) in the company employing them or in its parent undertaking. In return for the employee shares, the individual entering into the employee shareholder agreement will forgo and vary limited, specific employment rights.

Employee shareholder agreements have become increasingly popular with start-up businesses and private equity companies that expect to make substantial capital gains in a short to medium period of time. In particular, many new investment companies are identifying employee shareholder agreements as a way to attract and incentivise employees to produce good results. This is because good results are likely to increase the value of the company and, in turn, the value of the employee shares will increase…

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