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Employee Ownership Trusts
Employee Ownership Trusts (EOTs) have grown in popularity in recent years, since their introduction in 2014. By setting up an EOT, business owners can either completely exit, or take a step back from their business, transferring shares in the company into a trust which benefits all employees.
There are a variety of advantages to the EOT structure, including tax efficiencies and increased employee engagement. An EOT offers business owners a tax-free exit, as no Capital Gains Tax (CGT) arises on the disposal of the shares to the trust (provided the EOT fulfils the required statutory conditions, which allow it to be tax neutral). The owner receives full market value for the shares, as an independent share valuation is required as part of the EOT process. The structure also provides flexibility in how the owner approaches their future role in the business, with the option to fully exit the company or retain part of their shareholding, provided they have transferred at least a 51% controlling interest to the EOT.
EOTS can also be a good way for business owners to help preserve the culture of a company when they decide to retire, without selling to a third party. Employees are given the opportunity to own the company at minimal cost to them and receive the benefit of tax free bonuses of up to £3,600 a year.
Our experienced corporate team can help guide you through the legal issues in setting up an EOT, working with key tax advisors as required. Using our commercial expertise and a practical approach, we help ensure that the process is completed efficiently, and that the interests of all stake holders are protected.
EOT services we can advise on include:
- Pre-transaction reorganisations or restructuring
- Incorporation of the corporate trustee of the EOT
- Drafting governing documents and statutory registers for the corporate trustee
- Drafting trust deed to establish the EOT
- Drafting share purchase agreement for the transfer of shares to the EOT
- Drafting ancillary documents for the sale transaction, including Stock Transfer Forms, Board Minutes and Companies House forms
- Drafting vendor financing documents for deferred consideration
- Drafting shareholders agreement between the EOT and any continuing shareholders
- Ongoing advice for trustees.
We are members of the Employee Ownership Association.
Both Gallagher and Faye Cook have considerable experience in the preparation, negotiation, and completion of tailored share purchase agreements and transfers of ownership to Employee Ownership Trusts (EOT). – The Legal 500 2026
Our approach
Our award winning team of experienced corporate and M&A lawyers, based in Kent and acting for clients nationally, provides highly commercial advice to help ambitious, mid-market businesses develop and grow. Our clients appreciate our outstanding service, speed of response, availability of lawyers and clear advice. We work with a wide range of clients, from directors of large companies, AIM or listed companies, through to family and owner managed businesses and entrepreneurs. We have particular expertise in the corporate mid-market space across London, the South East and nationally.
We place an emphasis on understanding your commercial strategy to help us form part of your team of professional advisers. Our legal advice is not provided in isolation, and our focus is always on achieving your overall commercial objectives.
Our size and range of experience and expertise means we have the bench strength to bring in specialist lawyers at all levels to assist on relevant matters. We draw on support from the firm’s very strong Real Estate, Employment and Private Wealth teams to provide clients with a comprehensive service. In addition, we can advise on competition, pensions, corporate tax and commercial/IP/IT/data matters.
We regularly advise on highly complex and cross border transactions, for both domestic and international clients. We consistently receive glowing feedback from both our clients and industry peers.
Whether you instruct us to help you sell your business, acquire a company, restructure your share capital, raise finance or advise on the most appropriate vehicle structure for your business, our corporate and M&A lawyers will drive every transaction with energy, determination, intelligence and resourcefulness to ensure you achieve the best outcome.
The team are highly skilled lawyers, operating effectively and efficiently. They are able to communicate complex scenarios and technical points to their clients in an understandable manner and ensure the client has a full understanding of the transaction. They are exceptionally responsive and work collaboratively with the clients other advisors to achieve shared objectives.
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