The Department of Business, Innovation and Skills has today published its consultation on implementing the Government’s proposed new “employee owner status”, under which employees would sacrifice some employee rights in exchange for CGT-advantaged shares in their employer. The BIS press release is here and the consultation document is here (pdf).
Amongst the many thought-provoking aspects of the consultation document is a suggestion is that the Companies Act 2006 rules on share buy-backs might be relaxed after consultation (page 18):
“We would expect a company which chooses to have employee owners usually to implement this through an employees’ share scheme which is an established concept within company law. These schemes are defined within Section 1166 of the Companies Act 2006. Such schemes are already exempt from some statutory requirements of company law which relate to allotment and buy back of shares.
We therefore do not propose to make any amendments to the Companies Act 2006 to make special provisions for the new employee owner status.
Companies utilising employee share ownership often need to buy back shares from ex-employees so that they may be distributed to new starters or the existing cohort of employees. The Nuttall Review of employee ownership reported in July 2012 and made recommendations on promoting that business model further. It found these company law provisions around buying back shares could be overly-burdensome. In response to a recommendation made by the Nuttall Review, the Government will separately consult on simplifying that process so that companies and shareholders have fewer regulatory restrictions and processes to comply with.”