There are three general ways in which employee ownership can be structured in an employee buy-out process.
Different types of employee ownership
There are three general ways in which employee ownership can be structured in an employee buy-out process. Watch this short film explaining the different types of ownership structure.
- Individual employees directly own shares in the business they work for. This ownership may have been facilitated through employees purchasing shares using tax advantaged share schemes.
- An employee benefit trust owns shares in the business on behalf of beneficiaries. The beneficiaries of the employee trust are the existing employees, past employees and employees in the future. The employee trust holds these shares with no intention of ever selling them and any benefit derived from holding them is solely for the beneficiaries.
- A mixture of both direct and indirect ownership – i.e. individual employees directly own shares and an employee trust also owns shares.
What is an employee benefit trust?
Watch our short video about employee benefit trusts and financing buy-outs
Types of legal form
Employee buyouts may use a variety of legal forms including company limited by share/guarantee or a co-operative society. Find out more