Gifting Shares To An Empoyee - Risks?

[Displaycentreuk]

I am considering offerring a new, key employee a gift of some shares in my Ltd company provided that they deliver on some KPIs.

I realise that this is not tax efficient for them.

But my question is, how can I build into the agreement that the shares need to be returned if they leave my employement?

Thanks

Chris

 

[Alpha]

I am considering offerring a new, key employee a gift of some shares in my Ltd company provided that they deliver on some KPIs.

I realise that this is not tax efficient for them.

But my question is, how can I build into the agreement that the shares need to be returned if they leave my employement?

Thanks

Chris

There is a lot more to consider here such as the use of an EMI scheme which could be more tax efficient but in answer to the specific question ........Ask yourself why would anyone agree to receive shares for achieving a set criteria only to give them up if they left (You could of course build in a proposal that you could re-purchase the shares at an agreed price if they left)

Process should be to grant options upon achievement of the targets set. Options can be converted to shares within a set period of time (For EMI schemes between 3 and 10 years for example of agreement which will allow you to sell company and they would receive funds before they pay tax)

 

[elaine@cheapaccounting]

I am considering offerring a new, key employee a gift of some shares in my Ltd company provided that they deliver on some KPIs.

I realise that this is not tax efficient for them.

But my question is, how can I build into the agreement that the shares need to be returned if they leave my employement?

Thanks

Chris

Putting the legal / tax issues aside - with respect I can't see that makes sense.

Surely a bonus would be better and would be allowable for corporation tax

 

[obscure]

I'm with Alan. I don't think many people would be very pleased at being given shares that have to be given back. Probably better to come up with some other form of bonus, such as profit share, which would obviously terminate if they leave.