JSOPs—adopting and granting awards
Produced in partnership with Stephen Woodhouse and William Franklin
JSOPs—adopting and granting awards

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

  • JSOPs—adopting and granting awards
  • Why establish a JSOP?
  • Who is the joint owner?
  • Sourcing the shares
  • Funding the trustee of the EBT
  • Documentation required
  • Steps for adoption of a JSOP and granting JSOP awards
  • Unlisted company
  • Listed company
  • Notification of establishment of an EBT
  • More...

The adoption of a joint share ownership plan (JSOP) need be no different from any other share plan save that if new shares are to be issued, the issuance will occur immediately rather than, as with an option, at a later date. The shares will also be owned jointly by the employee and a third party.

Why establish a JSOP?

While JSOP awards provide a benefit similar to that of a market value share option to holders, when structured and implemented correctly, any gain realised under a JSOP award should be subject to capital gains tax rather than income tax and National Insurance contributions.

For further commercial advantages of JSOPs, see Practice Note: Introduction to JSOPs—Commercial rationale.

Who is the joint owner?

The employee beneficially owns shares jointly with a third party (as, in effect, ‘tenants in common’).

Shares are typically 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) or, possibly, a specially formed Guernsey or Jersey ‘purpose trust’.

In this note, it is assumed that the co-owner will be the trustees of an EBT. For details of the types of trustees that can be used, including an analysis of onshore trustees versus offshore trustees, see Practice Note: EBTs—on-shore and offshore trusts and tax implications.

Sourcing the shares

A UK company can only

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