Abstract
The lawyer’s task when advising on setting up Employee Share Ownership Plans (or ‘ESOPs’) can be quite complex. Essentially, the ESOP involves a trust to acquire and warehouse shares and a scheme to distribute these shares over a period to employees. The Finance Act (FA) 1989 introduced a statutory tax relief for companies which establish a new type of trust, the qualifying employee share ownership trust or statutory ESOP. Unlike the traditional, case-law ESOP, the statutory ESOP is governed by statute. Although it enjoys many advantages (e.g. contributions which the employer company makes to it are tax-deductible by statute), companies have been reluctant to set up statutory ESOPs because of restrictions imposed by the legislation as discussed in Chapter 1. Most ESOPs, therefore, still rely on case-law to ensure their tax effectiveness.
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© 1992 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Reid, D. (1992). ESOPs: Legal Complexities Unravelled. In: Wilson, N. (eds) ESOPS. Finance and Capital Markets Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12938-6_2
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DOI: https://doi.org/10.1007/978-1-349-12938-6_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-57618-2
Online ISBN: 978-1-349-12938-6
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