Giving Shares to an Employee

[The Soup Dragon]

We would like to "give" 5% of our companies shares to one of our key employees. We aren't going to issue any new shares, just re allocate what we already have. Could this possibly land them with a tax bill?

 

[Deleted member 356896]

We would like to "give" 5% of our companies shares to one of our key employees. We aren't going to issue any new shares, just re allocate what we already have. Could this possibly land them with a tax bill?

If they're gifted yes.

What's the approx value of the company?

Have you looked in to share options?

 

[The Soup Dragon]

If they're gifted yes.

What's the approx value of the company?

Have you looked in to share options?

How does share options work?

 

[ctrlbrk]

We would like to "give" 5% of our companies shares to one of our key employees. We aren't going to issue any new shares, just re allocate what we already have. Could this possibly land them with a tax bill?

What happens to their shares if they decide to leave the company?

 

[The Soup Dragon]

What happens to their shares if they decide to leave the company?

Company has first dibs to buy them back

 

[WaveJumper]

Not saying don't do it, but think very carefully about what you maybe getting yourself into and not being disrespectful in anyway judging by your question take some proper legal advice if your going down this route.

As above has mentioned, thing to consider value of your company, type of shares you may wish to give, voting, non voting, how does what you do fit with the current share allocations within the company ie you wouldn't be to happy if they could suddenly side with another share holder (if they have "normal" shares) and out vote you.

If they have shares again depending on type, what level of dividend and what happens to the shares if they leave and what value do you get them back at. Lots to consider as I say take some proper advice before jumping in.

CG50203 - Definitions: different classes of share - HMRC internal manual - GOV.UK

www.gov.uk

 

[Newchodge]

Company has first dibs to buy them back

At what price? What if they don't want to sell?

 

[The Soup Dragon]

Thank you guys, you have given me a lot to think about. I appreciate your inputs.

 

[WaveJumper]

Just a thought for you - I worked for a company that had a very nice bonus structure in place, based on quite a few personal goals plus income generated by commercial premises under my control, linked to an agreed marker (for the want of a better description) on the overall company bottom line ........certainly got us all focussed and involved on the company's business plan & success, earned some nice big bonuses along the way.

 

[Paul Kelly ICHYB]

Share options would have been my first comment - set up so that they can only be kept if in employment and without voting rights.

Please note that unless there is any real value in the business i.e. they are listed or are going to IPO, the options probably have little more than vanity value.