Andrew Evans assesses the positives of EOTS as a business ownership model, while warning of potential traps for the unwary.
Employee Ownership Trusts (EOTs) are not new, as they were introduced in the Finance Act 2014. However, the usage of EOTs has increased over the last 18 months, with Employee Ownership Association statistics showing over 120 companies transitioning to employee ownership in that period.
In summary, EOTs involve:
· The purchase of shares in a trading company
· A trust created for benefit of employees
· Holding a controlling interest in the company (at least 51 per cent of the ordinary shares and voting rights)