Building a supply of shares for future plan events

Employee share plans often need a ready supply of shares for vestings. When it comes to delivering these shares, you have a number of choices which can include alloting new shares, using treasury shares or using shares held in an employee share plan trust.
The amount of stock needed to satisfy plan vestings makes employee benefit trusts an attractive solution for the efficiency and independence they provide. With the absence of capital gains tax in Jersey, establishing an offshore employee share plan trust allows any accrual in the value of shares held in trust to be fully passed to the beneficiaries*.
We are the largest share plan specialist Jersey trustee business. We support employee share plan trusts for hundreds of quoted and private companies around the world, including a significant number of the FTSE100.
  • 25 years’ experience providing trust administration and accounting services
  • A truly global service delivered from our independent business in Jersey
  • Expert people with in depth knowledge of employee benefit trusts and related best practice
  • No high risk private or corporate tax planning
  • High corporate governance standards, authorised and regulated by the Jersey Financial Services Commission
*Other taxes may apply on trust assets depending on local tax advice applicable to the employee share plan trust. The beneficiary will be subject to all local tax and deductions that would apply on the total value of the assets received.

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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.

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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 dependants. 

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.

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