IDEAS FOR CHANGE

We have presented the following ideas to the government for further changes to enhance the acceptance and understanding, as well
as the ease of operation, of employee ownership:

First, there should be a clearer distinction drawn
for policy-makers and industry generally, between those companies with a
(variable) proportion of employee owners (and possibly also an
employees’ trust to facilitate this), and those (much fewer) companies
intended to be, and remain, wholly-owned by a trust for the benefit of
their employees. Insofar as special policy measures affording benefits
and exemptions for the latter are appropriate, they should be matched by
a requirement for transparency of corporate governance. Secondly, the
government should consider broadening the exemption from dividend tax
treatment of a sale of shares back to the issuer company, so that it
applies to sales back of EMI option shares. This would allow SMEs to
make shares available to employees in a tax-efficient manner, and buy
them back when they leave, without the cost an trouble of establishing
an employees’ trust to act as the purchaser and ‘warehouse’ of such
shares.