Lisa Stevenson (Parisi Tax) answers a query concerning employee ownership trusts, EBTs and succession planning
My clients are three brothers who together own 90% of the shares in a trading company which manufactures food products (‘the company’). The remaining 10% of the company is owned by an employee benefit trust (EBT) and some of the senior executives have EMI share options over new shares which are exercisable on a change of control. My clients are retiring and would like to sell their shares but they are proud of the ethos of the company and are concerned that a third party buyer may make radical changes to how it operates. Would the new employee ownership trust (EOT) model introduced by Finance Act 2014 be appropriate for succession planning? Could the existing EBT be used to acquire their shares for these purposes?
