Non Tax-Advantaged Share Plans

Service overview: Non tax-advantaged (unapproved) share arrangements

  • Non tax-advantaged share plans enable employers to offer staff the option to purchase shares in their company in the future, at an agreed pre-set price, ideally benefitting from increased value at exit.
  • Non tax-advantaged share option arrangements differ from tax advantaged arrangements in that there is no requirement for HMRC to provide approval for their use. They can be a good route if your company or employees don’t qualify for tax-advantaged (approved) plans like Company Share Option Plans (CSOPs), and EMI options. If you do qualify for approved share plans, there are also ways of combining approved and unapproved shares together.
  • There are several share incentive arrangements available to employers. Our team of specialist employee incentive solicitors can outline the pros and cons of each.
  • Equity-based option plans provide a useful way of incentivising and rewarding loyalty and hard work without immediately diluting shareholding.
  • Share options differ from share award schemes in that employees are not gifted partial ownership of the company. Hence no changes to the articles of association or shareholders’ agreement are required until the option is exercised.
  • Regardless of the scale of your business, our employee incentive solicitors have the knowledge and experience to help you review and implement a share-based incentive arrangement which fits your immediate and long-term financial and business objectives.

What we do: Non tax-advantaged share plan legal advice

Non HMRC tax advantaged share options provide an effective way for employers to encourage and reward loyal and hardworking employees by offering equity in their company. Under this arrangement, employees have the option to purchase shares in the future at a price defined by the company.

These types of share option arrangements can be offered to members of staff who are not eligible for tax-advantaged (approved) options plans; including overseas staff, or consultants.

We can work alongside you to determine if a non-HMRC tax advantaged arrangement is right for you and help with structuring, set up and ongoing administration, helping to ensure you attract the most effective tax benefits.

  • Ordinary and preferred shares via sale or gift
    We can re-structure your company so you can make awards of ordinary or preferred shares to employees and advise on dilution, share classes and special rights for shareholders such as voting and dividend rights
  • Growth share and hurdle share arrangements
    These arrangements work well for early-stage and growing businesses, but the conditions that apply and issues relating to company valuation need to be carefully managed. We can review your company’s suitability for a growth/hurdle share arrangement, draft the growth/hurdle share subscription agreements, assist with company valuation and make the required amendments to your company’s constitution
  • Share options and restricted stock units
    These arrangements don’t require HMRC clearance or company valuation, and the paperwork can be more straightforward. Our expert team can advise whether a non-tax advantaged share option or RSU arrangement is right for you and support you through the implementation process.

Employment law, directors remuneration and impact on investors

Where your company is intending to offer employees options or shares in the company, our multi-disciplinary team can advise on the tax, employment law, company law, prospectus laws, financial services laws and data protection aspects of such arrangements, and draft all the necessary documents. We also have considerable expertise advising executives on directors’ remuneration and other corporate governance issues, critical considerations when implementing an employee incentive arrangement.

Our expert lawyers can provide advice on the potential impact on founders and investors.

Who we help: Employers at all levels, from start-ups and scale-ups to large corporates

Listed companies and large private companies normally have employee incentive arrangements for staff. Similar, but appropriately designed alternative arrangements are also commonly used in smaller companies, including seed and early-stage companies. High-growth companies tell us that finding and retaining top talent when a business is scaling is one of the key risk areas, and balancing the needs of founders, investors and employees while managing cashflow and protecting working capital is crucial, particularly when considering an employee incentive arrangement.

Pricing plans

Our three transparent pricing packages are designed to give you the widest possible access to high-quality legal advice, whatever the size and nature of your business:

City

Straightforward access to senior solicitors at a competitive rate.

An affordable solution for businesses needing one-off legal support. Receive ‘City’ partner-level expertise at a fraction of ‘City’ prices.

Enterprise

Have legal peace of mind for £189 per month with additional support from £99 per hour.

A monthly subscription legal support package specifically designed for start-ups and smaller businesses.

On-Demand

For businesses requiring 60+ hours of support a year, with prices equivalent to £99 per hour.

Fully account managed quarterly subscription service for businesses with more complex legal needs.

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