Guide to implementing Employee Share Schemes

Implementing an employee share scheme is a complex process that requires careful planning and adherence to legal and regulatory requirements.

Here's a comprehensive guide for organisations looking to establish and manage an employee share scheme:

1. Understand the Objectives:

• Clearly define the goals of the share scheme. Determine whether it's meant to incentivise employees, attract top talent, retain key personnel, or achieve other strategic objectives.

2. Legal and Regulatory Compliance:

• Consult with legal experts to ensure compliance with all relevant laws and regulations, including tax laws and employment legislation.
• Identify the appropriate share scheme structure, such as the Enterprise Management Incentive (EMI), Share Incentive Plan (SIP), or other suitable schemes.

3. Design the Scheme:

• Decide on the type of shares employees will receive, such as ordinary shares, preference shares, or options.
• Determine the eligibility criteria, including who can participate (e.g., full-time employees, part-time employees, directors).
• Establish the vesting period (the period an employee must work before becoming eligible for shares).
• Set the valuation method for shares and decide whether employees will pay a fair market value or receive them for free.
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