Why use an employee share plan trust?
Holding shares for deferred bonuses
Deferred bonuses are becoming a common theme where a portion of an executive’s cash bonus must be deferred into shares and restricted for a period of time. An employee share plan trust creates an independent vehicle in which such shares can be held.
Creating a market for employee shareholders
Employee share plan trusts can be used by private companies or public companies with illiquid stock to create a flexible and efficient internal market for their shares.
Allowing participants to exercise shareholder rights
Where a company is restricted from holding its own shares, an employee share plan trust can allow shareholder rights (e.g. to vote or receive dividends) to be passed on to beneficiaries as part of a share plan.
Heidi Wilson, Managing Director, Computershare Channel Islands
Establishing an employee share plan trust
An employee share plan trust is established by the execution of a Trust Deed between a company and a trustee, along with an initial settlement of property into the trust.
This settlement is normally a gift of a nominal amount of money. Further contributions can be made, either by gift or by loan, so that the trust has funds to acquire shares in the company. This allows the trust to build up a holding of shares that can be used for future vestings of options or awards under the company's share plans.
Whilst the company establishes the trust and has a degree of indirect control by way of its ability to appoint and remove trustees, the trust is run independently from the company. The trustees must act independently and ensure that any decisions they make are in the best interests of the beneficiaries, which are usually defined as all present, future and former employees of the company and their
The overall benefit of an employee share plan trust will depend on the prevailing legislation in the country where the issuer company is incorporated, the type of share plan/s it will be used for and the location of the employee beneficiaries. Thorough legal and tax analysis should be carried out.
Computershare Channel Islands - safe hands for your employee share plan trust
As Computershare Channel Islands, we are the largest independent trustee that specialises in share plans. We are truly independent, working with other plan administrators, in-house teams and our own plan administration clients. Maintaining our offshore status is crucial to safeguarding our clients' assets. This is why we employ the largest team of trust experts in Jersey and stay well away from high risk private or corporate tax planning structures.