Introduction to JSOPs
Produced in partnership with Stephen Woodhouse and William Franklin
Introduction to JSOPs

The following Share Incentives practice note Produced in partnership with Stephen Woodhouse and William Franklin provides comprehensive and up to date legal information covering:

  • Introduction to JSOPs
  • What are JSOP awards?
  • Commercial rationale
  • Risks associated with JSOPs
  • Outline of legal structure
  • Main tax points
  • Valuation
  • Accounting for JSOP awards
  • DOTAS regime and JSOPs

What are JSOP awards?

Jointly owned shares are no more and no less than their description implies, namely shares owned jointly by an employee or director and a third party, either an investor in the company or, more commonly, the trustees of an employee benefit trust (EBT).

The concept of joint share ownership was developed as an alternative to other forms of share incentives such as share options, restricted shares or performance share plans (often using nil cost options).

The benefit delivered under a joint share ownership plan (JSOP) award is equal to the increase in share value post-grant (normally increased by a ‘carrying cost’), and therefore a JSOP award is similar to a market value share option but with a different tax treatment.

Commercial rationale

The structure has several commercial advantages compared with other forms of awards. These include:

Compared with share options or performance share plans with delayed share acquisition:

  1. a direct alignment of the interests of the participants and other shareholders due to the participant acquiring immediate beneficial ownership of an interest in the shares

  2. due to this ownership, the immediate ability for participants to receive dividends in line with their share interest

  3. when structured and implemented correctly, any gain realised under a JSOP award should be subject to capital gains tax (CGT) rather than income tax and National Insurance contributions (NICs)

  4. unlike HMRC tax-advantaged plans, there

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