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Are you looking to retire from a business you own but want to get a fair sale price whilst ensuring the business retains its independence, does business as usual and rewards the employees who helped you build it? Or perhaps you’re setting up a new business and want to attract talented and committed employees and create a positive culture.
A combined or hybrid approach to employee ownership could be the right model for you.
In its simplest form, shares are held in a combination of individual direct and collective indirect ownership.
Under a combined model, businesses will use an EOT (Employee Ownership Trust) hold the majority of the shares in order to ensure the stability of ownership. Alongside this, a tax efficient share scheme such as an SIP (Share Incentive Plan) may then be used to distribute the remaining shares to employees.
In the combined/hybrid model, those individuals who own shares may receive additional income by way of dividends declared on their shares and may make capital gains if they sell them.
An EOT ensures that whilst individual shareholders may ne interested in personal benefits, there is a natural focus on longer term stability and ownership. All employees, present and future, are able to share in the success of the business, because of their involvement in the EOT. As individual shareholders they may receive direct monetary reward for businesses or personal success.
If an EOT is used, it must have a majority (more than 50%) stake in the company. When combining and EOT with a share scheme for example, the EOT needs to be carefully maintained. As there are effectively two forms of employee ownership running at the same time, the obvious additional administrative processes need to be factored in.
Implementing a combined direct and indirect model of employee ownership takes some planning. We can guide you through the entire process, fully-funded, so you get the right result for you and your business.
Our fully funded support will explore how a hybrid approach to EO can work for your company. It includes:
Formally known as the Wales Co-operative Centre, Cwmpas is a registered society under the Co-operative and Community Benefit Societies Act 2014, number 24287 R.
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