The following Share Incentives practice note produced in partnership with Jeremy Glover (Share Schemes) provides comprehensive and up to date legal information covering:
An employee benefit trust (EBT) is a form of trust. A trust refers to the legal relationship created by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust (including an EBT) generally has the following characteristics:
the assets constitute a separate fund and are not a part of the trustee’s own estate
title to the trust assets stands in the name of the trustee, and
the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law
As a general rule, a trust (including an EBT) must have certainty of objects, and in the case of non-charitable trusts such as an EBT, there must be someone in whose favour the court can enforce the trust. It is settled law that a trust for the benefit of employees generally is valid provided that it does not infringe against the rule against perpetuities.
An EBT is a discretionary trust which means that it is a trust for a class of beneficiaries as opposed to individuals. As a discretionary
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