JSOPs—funding the acquisition and terms of the plan
Produced in partnership with Stephen Woodhouse and William Franklin
JSOPs—funding the acquisition and terms of the plan

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

  • JSOPs—funding the acquisition and terms of the plan
  • Basic structure of a JSOP
  • Funding the acquisition of the jointly owned shares
  • Terms of the JSOP

Basic structure of a JSOP

The basic structure of joint ownership involves two owners, namely the employee participant who owns the growth interest, and the co-owner, holding the balance of the interest in the shares.

Typically, the co-owner is the trustee of an employee benefit trust (EBT) established by the company, either specifically to facilitate the jointly owned share structure or established as a general employee share ownership trust. In this practice note, it is assumed that the co-owner will be the trustee of an EBT.

For more general information on joint share ownership plans (JSOPs), see Practice Note: Introduction to JSOPs.

Funding the acquisition of the jointly owned shares

The EBT trustee will usually be funded by the company. There are various approaches to funding, each with different consequences and considerations.

Contribution

The first and in some ways simplest approach would be for the company to make a contribution by way of gift to the EBT. This is the simplest in that there is no requirement for loan documentation or the involvement of third party lenders. Rather, there can be a simple resolution on the part of the directors of the company to make a contribution, linked with a recommendation that the contribution be used to purchase shares jointly with employees pursuant to the terms of the proposed JSOP. For

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