Is the employee shareholder status scheme appropriate?

Question

Our client is an unlisted company that is looking to incentivise its key employees in the form of equity. The company understands that it is not eligible to grant enterprise management incentives options due to it being under the control of another company. However the company has heard about the ‘shares for rights’ scheme and the significant CGT benefits that are available under it. The company wants to know whether it will be eligible to operate such a scheme and what the tax benefits would be.

Answer

Employee shareholder status (ESS) or ‘shares for rights’ as it is sometimes known was introduced in September 2013 amidst a fair amount of controversy. The basic premise of ESS is that in return for giving up certain employment protection rights (including the...