Employee share schemes

Our multi-disciplinary share incentives team delivers comprehensive solutions to businesses seeking to provide share incentives to their employees, directors and other service providers. We can take you from the initial stages of designing and structuring arrangements through to their implementation and assisting with exits.

Clear, practical support

Employee share schemes offer a powerful tool for early-stage and high-growth companies looking to attract, retain, and motivate top talent. By aligning the interests of employees with the success of the business, these schemes can foster loyalty, enhance productivity, and drive innovation – crucial factors for companies in competitive, fast-growing industries. They also provide a cost-effective alternative to high salaries, allowing businesses to conserve cash while offering employees a valuable stake in the company’s future success.

However, while the benefits are clear, setting up employee share schemes is a complex area where high quality, professional guidance is essential to ensure that companies avoid tax and other traps. Our specialist lawyers combine corporate, tax, employment and trusts expertise to provide a complete service.

At Penningtons Manches Cooper, we advise companies, large and small, across a broad range of sectors, but have particular expertise in acting for high growth technology and life sciences companies for whom employee share schemes are a key part of their remuneration packages.

We offer guidance on and implement a range of tax-efficient solutions, including employee management incentive option schemes. Where tax-advantaged schemes are not suitable, due to eligibility requirements or other issues, we have considerable experience in implementing other kinds of employee incentive plans to optimise both the incentive effects and the tax position.

The team has built a longstanding relationship with us which brings significant advantages: instructions are quick and seamless, and advice is tailored to our circumstances.

While tax-efficiency is a key concern, we never forget that when allocating shares to employees, even under options, shareholders are giving away part-ownership of the business. It is essential that key legal documentation deals appropriately with the complications that can arise from employee shareholdings, such as good leaver/bad leaver issues, and the handling of a sale or flotation of the company.

Our experience with share schemes and corporate transactions allows us to give clear, practical support to ensure the arrangements contain all the necessary legal protections and to minimise the risk of destroying shareholder value.

How we help our clients

Enterprise management incentive (EMI) schemes

Unapproved share option schemes

Growth shares

Restricted share arrangements

Company share option plans (CSOPs)

Share incentive plans (SIPs)

Employee benefit trusts (EBTs)

Nil paid shares

Long term incentive plans (LTIPs)

Phantom share schemes

Useful resources

Navigating the journey of growth: Key legal considerations for scaling up

Deep experience in understanding the requirements of both investors and investees.

A laser-like focus on the desired outcome left me feeling like we got tremendous value.

The VC tax team at Penningtons is the jewel in the crown and by far the most impressive VC tax team in the industry.

Recent work highlights

MRI imaging share incentives

Assisting a provider of advanced imaging solutions using non-invasive MRI technology on several issues relevant to share incentives for a high-growth company.

VR cognitive treatment share incentives

Advising a provider of virtual reality-based cognitive treatments for psychological conditions on its share incentive arrangements following the establishment of an employee benefit trust.

AIM-listed company

Advising a leading IT governance, risk management, and compliance solutions provider on the company’s share incentive structure, including preparing a share incentive plan that was suitable for an AIM-listed company.

Tech company growth-share scheme

Acting for a successful VC-backed technology company on the design and implementation of its growth-share scheme, which recognised the high value of its ordinary shares and sat alongside the complex waterfall rights of its investors.

Digital media business

Acting for a high-growth digital media business on the implementation of a share incentive scheme over tracker shares whose rights were limited to the value of one of the group’s subsidiary companies.

Tech management incentive plan

Providing advice on a management incentive plan for a semiconductor technology company, involving share options and cash bonuses across multiple jurisdictions, including the US, Germany, France, and Sweden.

Funding round investor tax reliefs

Advising a company which creates a biodegradable cellulose ‘microsphere’ alternative to microplastics on investor tax reliefs and share incentives as part of a £7.8 million Series A funding round.

Equity incentive plan

Acting for a provider of materials and services for the selective recovery of valuable metals on an equity incentive plan for key employees and advisors, including tax efficient share options, unapproved options and share issues subject to claw-back.

Oxford spin-out funding

Advising a spin-out from Oxford University on its Series A+ funding round, including structuring the investment in an EIS-eligible way and advising on top-up equity incentives.

Funding round investor tax reliefs

Equity incentive plan

Oxford spin-out funding

Advising a spin-out from Oxford University on its Series A+ funding round, including structuring the investment in an EIS-eligible way and advising on top-up equity incentives.