SIPs—requirements relating to the trust and the trustee
Produced in partnership with Jonathan Fletcher Rogers of Addleshaw Goddard
SIPs—requirements relating to the trust and the trustee

The following Share Incentives guidance note Produced in partnership with Jonathan Fletcher Rogers of Addleshaw Goddard provides comprehensive and up to date legal information covering:

  • SIPs—requirements relating to the trust and the trustee
  • Requirement for trustees
  • Requirement for a trust and trust instrument
  • Duties of the trustees
  • Powers of the trustees
  • Trust Registration Service

The share incentive plan (SIP) legislation is very prescriptive in relation to the nature of the trust that is required to operate in conjunction with a SIP, and the permitted rights and obligations of the trustees. Therefore, it is likely that any new SIP will require a new trust to be established at the same time. This Practice Note looks at what requirements apply to SIP trusts as well as the trustees of such trusts.

Requirement for trustees

The trust is a key element of the share incentive plan (SIP). In order to operate a SIP, it must provide for the establishment of a body of trustees consisting of persons resident in the UK. Therefore, each and every person acting as trustee, whether an individual or a corporation, must be resident in the UK.

Most publicly listed companies operating SIPs have a single professional corporate trustee but the trustees can also be a collection of at least two individuals or a subsidiary of the company.

Requirement for a trust and trust instrument

The functions of the trustees with respect to shares held by them must be regulated by a trust which is constituted under the law of part of the UK (ie England and Wales, Scotland or Northern Ireland). The terms of the trust must be contained in an instrument

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