RM2 > Services > Share Plan Health Check

Share Plan Health Check

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When correctly structured employee share schemes can play a central part in attracting, motivating and retaining staff. The evidence shows that companies offering such schemes tend to outperform their peers on a variety of measures. Additionally, share schemes can offer substantial tax savings and cash flow advantages.

However, when schemes go wrong the results can be costly. The consequences can and do include:

  • Delayed business exit;
  • Reduced business valuation on exit; 
  • Disengaged management; 
  • Loss of tax advantages with, in some cases, additional penalties and interest.

Ensuring continuing compliance is a specialist task. The legislation affecting employee share schemes is complex and changes frequently. There are also frequent changes to the custom and practice of HM Revenue & Customs. The RM2 Partnership is a leading specialist in this field. We offer a specialist Health Check service which covers both legislative and operational compliance. This process looks at all relevant aspects of:

  • Tax legislation, including HMRC notifications and approvals;
  • Company law including interaction of scheme rules with articles and shareholder and/or investment agreements where relevant;
  • Accounting treatment and share award expensing;
  • Corporate governance guidelines, standards and shareholder permissions;
  • Scheme procedures and documentation including PAYE and NIC procedures and withholding requirements;
  • All HMRC annual returns, trust self-assessment returns and other statutory reporting.

This comprehensive review will also highlight any issues that might cause legal difficulties in relation to due diligence on a future change of control or corporate restructuring. We also look at how the scheme is communicated to employees, to ensure that it is properly understood and valued. Additionally, RM2 will assess the scheme structure against available alternatives and where relevant will make recommendations for modification, extension or replacement of the scheme if this seems likely to deliver greater benefits.

The process starts with an exploratory meeting, which is free of charge. We will then provide a fixed fee quote for the Health Check report. Fees start at £1,500 + VAT and will vary depending on the complexity of the existing equity plans.

The RM2 Partnership has implemented over 700 employee share schemes. Increasingly, the firm is asked to take on the administration of existing share schemes and we have found many examples of schemes that are not correctly designed, poorly communicated or even completely invalid. In the latter case, there can be major tax implications and a strong negative impact on the motivation and commitment of scheme participants.

Once RM2 has performed a Health Check, we are sometimes able to undertake remedial or optimisation work and are often asked to provide on-going administration services. RM2 offers a fully comprehensive and tailored share scheme administration service at very competitive rates. Please contact us on 020 8949 5522 for further details.

 
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