Offshore ESOPS For UK Companies

WHAT IS AN ESOP?

ESOP stands for Employee Share Ownership Plan. An ESOP is a trust for the benefit of a company's employees. The purpose of an ESOP trust is to acquire shares in the company - with funding provided in the form of a gift or a loan by the company - and distribute those shares to some or all of the company's employees. This is usually via one or more employee share schemes such as share option schemes, profit sharing schemes or restricted share schemes.

WHY DO COMPANIES SET UP ESOPs?

There has been an enormous growth in the number of ESOPs in recent years. The main reasons for setting up ESOPs are:-

1) Motivation of Employees

A method of motivating employees is to link their compensation package to the performance of the company. This can be accomplished by providing employees with the ability to acquire shares in the company through an employee share scheme. Employees will then have a very tangible means to profit from the company's success.