CG56710 | Employee shareholder shares: terms used

An individual who is or becomes an employee of a company may enter into an agreement with that company by virtue of which he becomes an employee shareholder (see CG56705). A share acquired in consideration of an employee shareholder agreement and held by the employee is referred to as an ‘employee shareholder share.’ Shares do not cease to be employee shareholder shares by reason only of the employee ceasing to be employed by the company.

Shares acquired in consideration of an employee shareholder agreement may be in the employer company or in its parent undertaking and may be acquired in more than one tranche.

For the meaning of ‘parent undertaking’ see Section 1162 Companies Act 2006. It includes a company that has a majority of the voting rights in the employer company.