Guide to Employee Share Ownership Plans (ESOP)

In Ireland ESOP is the term commonly used to describe an all-employee share
participation plan which is made up of a combination of two Revenue approved share
schemes, viz, the Employee Share Ownership Trust (ESOT) and the Approved Profit
Sharing Scheme (APSS). Historically ESOPs are most prevalent where semi-state
bodies are being privatised or sold, although any company may choose to implement one.
The ESOT is a tax favoured vehicle which typically stockpiles shares for employee
participants for distribution over time. It does not itself afford participants direct access to
shares in a tax efficient manner. Tax relief is afforded to participants by way of share
appropriations via an APSS. The main features of an ESOT are outlined below. For more
information on the operation of an APSS please see the Guide to Approved Profit Sharing
Schemes.

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Employee-share-schemes-in-Ireland 2

Employees can avail of certain share options from their company that may be exempt from income tax.
There are 3 main ways in which an employee can benefit from shares in the company:
• Approved Profit-Sharing Schemes
• Share Options
• Key Employee Engagement Programme (KEEP)
Generally, gains arising from various share schemes are subject to the Universal Social Charge (USC) and
Pay Related Social Insurance (PRSI). Gains from share options on the KEEP programme are instead subject
to Capital Gains Tax.

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Unpacking Employee Share Ownership Plans ESOPs in South Africa

Introduction
Globally, the empowerment of historically disadvantaged groups, economically, is not uncommon.
As such preferential policies geared towards transformation have been a common feature
especially towards advancement of historically disadvantaged groups. One such empowerment
policy has been that of Employee Share Ownership Plans (ESOPs). Globally, employee
empowerment schemes are considered to be part of many public and private companies and despite
the availability in various forms of employee ownership programs, ESOPs have proven to be met
with much success in comparison. ESOPs have been implemented successfully by many
international companies in many different sectors. Construction companies, banks, insurance
companies, textile manufacturers, architectural firms, health care providers, hotels and resorts and
many other industries have successfully employed ESOPs, (Rosen et al 2005). Despite the
availability of many empowerment schemes, ESOPs have received the most universal acceptance
and support. However, despite their perceived success in terms of acceptance, how ESOPs have
fared internationally has been highly dependent on mainly the various company and country
circumstances and as such offer varying accounts of success

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ESOPs-in-CANADA

An Employee Share Ownership Plan (ESOP) allows employees, who qualify, to purchase shares in their
employer’s company, with or without monetary assistance from the company.
Employees can acquire shares and ownership through an ESOP that can range from one percent to 100
percent.
The key aspect is that employees have an ownership stake in the company they work for and share in the
risks and rewards that accrue to it.

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Employee-share-incentive-scheme-in-South-Africa

Preamble
This binding class ruling is published with the consent of the applicant(s) to which it
has been issued. It is binding between SARS and the applicant, any co-applicant(s)
and the class members only and published for general information. It does not
constitute a practice generally prevailing.

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Australia – What Is Employee Ownership?

Employee ownership is where a company gives its employees shares in the company in which they work.
This can involve part ownership or full ownership.

Part Ownership: Where employees make up a percentage of the owners of the company.
Full Ownership: Where the employees effectively own the company.

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Revenue approved share schemes

by Robert Scallon

Overview
An employer needs Revenue approval to set up certain tax-efficient employee share schemes. These are
known as ‘approved share schemes’. There are three types of Revenue approved employee share schemes:
• Approved Profit-Sharing Schemes (APSSs)
• Employee Share Ownership Trusts (ESOTs)
• Save As You Earn (SAYE) schemes.
Shares awarded, or options granted, under an APSS and SAYE scheme, are exempt from Income Tax (IT).
If the ESOT is used in conjunction with an APSS, those shares are also not subject to IT.
You must pay Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the value of the
shares.

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Employee share schemes in Ireland 1

by Robert Scallon

Employees can avail of certain share options from their company that may be exempt from income tax.
There are 3 main ways in which an employee can benefit from shares in the company:
• Approved Profit-Sharing Schemes
• Share Options
• Key Employee Engagement Programme (KEEP)
Generally, gains arising from various share schemes are subject to the Universal Social Charge (USC) and
Pay Related Social Insurance (PRSI). Gains from share options on the KEEP programme are instead subject
to Capital Gains Tax.

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Giving workers the opportunity to profit-share and use their voice can benefit companies as a whole

Pete Stavros – Financial Times – August 1/22
The writer is co-chief of KKR’s Americas Private Equity business and founder of Ownership
Works
My story used to be a familiar one. I’m a first-generation college graduate from a
hardworking, blue-collar family. My parents scrimped and saved and made a small real
estate investment. While we lived day to day on my Dad’s construction job wages, owning
an appreciating asset brought us into the middle class. Today, not enough families enjoy the
upward mobility that mine did

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