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Back to basics: Employee share trusts

David Craddock provides your refresher guide

The employee share trust has developed as an integral part of operating employee share schemes providing a mechanism for the warehousing and the recycling of the company’s shares and representing an opportunity to avoid the dilution that is often associated with new issue shares and additional dividend in perpetuity. The express flexibility of the discretionary trust concept enables the company’s employee share scheme to provide solutions to a formidable array of business challenges and indeed can offer advantages to businesses of any size from the multinational quoted company to the SMEs.

Their uses

  • to create a market for the shares in the absence of a recognised stock exchange;
  • to support the operation of employee share scheme arrangements;
  • to avoid dilution by recycling existing shares for employee share schemes;
  • ...

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