On 4 July 2012, the Department for Business, Innovation and Skills published the final Report of the Nuttall Review of Employee Ownership.
The Government is committed to increasing the number of UK companies which have employee ownership, and commissioned this Review on how growth in employee share ownership might be achieved. Referring to evidence from, for example, Cass Business School, it believes wider employee share ownership has the potential to create stronger performing and more resilient companies.
The Report identifies three key barriers:
• A lack of awareness of employee share ownership and its benefits among companies and their advisers
• A lack of sources of finance for companies wishing to transition to employee ownership
• The perceived complexity of employee ownership
The Report makes several recommendations, which include that the Government should:
• Invite views on the introduction of a new statutory right for employees to request consideration by their employers of employee ownership proposals.
• Create simplified ‘off the shelf’ models of an employee-owned company which reduce the complexity and uncertainty of the process. These models should include templates for articles of association for an employee-owned company and related documents.
• Establish a steering group to advise the Minister on the views of the employee ownership sector.
• Identify ways for accountants, lawyers and other business advisers to develop their knowledge of employee ownership, its benefits and available structures and solutions.
The Report also advocates better promotion of the various sources of finance that can be well-suited to employee-owned companies, and a review of tax policy to ensure that complexity is minimised. However, while the Report refers to evidence that the tax system can be used to make employee ownership and participation more attractive, it does not make any specific proposals regarding possible tax incentives to be considered by the Government to encourage wider employee ownership, such as a shorter period in which shares acquired by employees through a Share Incentive Plan (SIP) must be held and a more benign tax treatment for employee trusts whose purpose is to acquire share as part of a company’s ownership succession plan.
For the latest news on Employee Ownership visit http://www.postlethwaiteco.com or you can read the final Report on the BIS website by clicking on the link below:
You can also read the Cass Business School Report "The Employee Ownership Advantage" published July 2012 by clicking on the following link:
The Government will formally respond to the Report in autumn 2012.
News release ends, 17 July 2012.
Note for Editors:
POSTLETHWAITE is a law firm which provides specialist advice on employee share schemes, employee share ownership and majority employee ownership, including EMI share options, approved options, long term incentive plans, Share Incentive Plans (SIPs), ownership by employee trusts and a wide variety of other share schemes. We look after clients from all parts of the UK, with a particular focus on smaller listed and private companies.
For further information concerning employee ownership and employee share incentives, please contact Robert Postlethwaite on 020 7470 8805 11-15 Betterton Street London WC2H 9BP
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