From the UK: The ESOP Centre's Proposed Changes

Reviewing the recently published ESOP Centre's proposed changes to UK policy on Employee Ownership

In Brief: The UK– based Employee Share Ownership Centre (ESOP Centre) recently released a proposal of changes to current government policy they believe would enhance the effectiveness and accessibility of employee ownership in the country. 

Why It Matters: The ESOP Centre offers a review of UK employee ownership policies. As other countries, including the United States, look to implement policies of their own, looking at the policies of the UK—and determining what did and didn't work—can serve as a guide on what US policy could and should look like. 

What They Said: One proposal is to expand who qualifies for share plans by reconsidering who is defined as an ‘employee.’ Other suggestions include decreasing the tax-free period for companies from the current five to three years, but including all three years in the ‘tax-free period,’ so that companies would have the flexibility to keep shares in the Share Incentive Plan (SIP) tax haven should an employee quit or be fired during that period. 

Also: The Centre also suggested changes to Employee Ownership legislation. These included limiting the ability of trustees to ‘claw back’ shares of the company after a certain time period, making the sale of shares conditional on a released ESOP (employee stock ownership plan), and allowing shares held in a SIP to be counted towards the 51% share that is required for a group to have a “controlling interest.”

Go Deeper: Read the recommendations here.

Image Credit: The Menke Group