Jersey trust law amended to facilitate the use of a ‘purpose trust’ to hold shares for an employees’ share scheme.

The use of a Guernsey ‘purpose trust’ to hold shares , or interests as joint beneficial owner (with employees) of shares pursuant to an employees’ share scheme has become more common, particularly to act as joint owner of shares under a Joint Share Ownership Plan (or ‘JSOP’). Using such a trust as co-owner allows surplus assets remaining after the jointly-owned shares have been sold to be returned to the Company. If the co-owner is a conventional ‘employee trust’, surplus assets, after repayment of loans, are ‘trapped’ in the trust in the sense that they cannot then be returned to the company as it is not a beneficiary. Until recently, concern had been expressed that the Trusts (Jersey) Law of 1984 (as amended) did not clearly allow for the creation of a trust the sole purpose of which was to hold shares or interests in shares for the purposes of an employees’ share scheme. This uncertainty has now been resolved by the Jersey legislature amendments which have effect from 2 November 2012.