Employee Ownership Trust (EOT)
Herrington Carmichael have a specialised team who have represented many clients in various EOT transactions.
The implementation of an EOT involves the transfer of shares in a trading company, from the original owners, to a trust. The trust then holds the shares on behalf of the employees of the company.
Managing Partner, Yavan Brar, leads the EOT team and works closely with Sophie Protheroe.
We are able to advise on all stages of the EOT process, including:
- providing initial guidance on whether the relief requirements as set out in s236H(4) TCGA 1992 are likely to be satisfied to allow CGT relief to be obtained;
- preparation of the HMRC clearance letter;
- management of the due diligence process;
- assisting in the explanation of the EOT process to employees;
- advising on the trust composition;
- drafting and negotiating transaction documents; and
- advising on post-completion requirements.
Structuring your business
At Herrington Carmichael we have specialist Corporate Lawyers who can help you explore which business structures are suitable and advantageous to you from a legal and commercial perspective.
What business structures are available?
Navigating the intricacies of structuring a business can be difficult, but the implications can be significant. Your structure may also need to change as your business develops and matures. Our corporate team can advise upon the most commercially suitable structure to ensure that the framework of your business matches your goals and corporate objectives.Sole Trader – is an unincorporated business structure whereby a person owns and runs their business as an individual.
A Company limited by shares – a company which is a separate legal identity from its founders, benefitting from limited liability status for business debts. This type of business structure can be either public or private.
A Company limited by guarantee – a company which does not have share capital and which is most commonly used for not for profit organisations. The Members’ liability will be limited to the amount that they guarantee to contribute in the event that the company is wound up.
Unlimited Company – a company which does not have any limit on the liability of its members.
Limited Liability Partnership (LLP) – a hybrid between a limited company and a partnership which benefits from the flexibility of a partnership whilst still maintaining limited liability status.
Partnership – an unincorporated business structure which occurs when two or more people run and own a business together ‘with a view to make a profit’.
Partnerships & LLPs
Herrington Carmichael advises clients on all aspects of partnership law and we are trusted advisers to individuals and firms in a wide range of sectors. Our team understands the commercial and practical challenges that LLPs and partnerships face and our advice is tailored to suit the needs of your business.
We act for both firms and individuals at every stage of a partnership’s life cycle, be it at the start of a partnership or right the way to an exit or a dissolution of a partnership.
Our corporate team provide advice on a broad range of partnership related matters including:
- Setting up an LLP or converting your business from a general Partnership to an LLP
- Drafting a Partnership or an LLP Agreement
- Reviewing and advising upon the rights and obligations of a partner under an LLP or Partnership Agreement
- Exits and retirements from an LLP or Partnership
- Advising on the process for appointment or removal of a partner.
Joint Ventures
A joint venture is where two or more businesses decide that they want to work together on a particular project. Joint ventures can take a variety of forms and, our corporate team offer a full range of services in relation to joint ventures, including:
- The set up of the new business
- Drafting joint venture agreements
- Reviewing existing joint venture agreements
- Advising on the potential structures of a joint venture
- Advice on exits from a Joint Venture
- Drafting bespoke Articles of association for the new joint venture entity.
Given the nature of a joint venture, it is imperative that each party’s obligations, expectations and rights are clearly established and agreed before any financial investment and / or intellectual property is created.
Our corporate advisory team understand the complexities involved in forming an effective joint venture and as such, we work closely with our clients to ensure their objectives are achieved. From initial negotiations to drafting joint venture agreements and implementing the business structure, we provide a complete service tailored to each client and their needs.
Shareholder Agreements
A Shareholder’s Agreement is an agreement entered into by the shareholders of a company to regulate their relationship, the management of the business and the share capital of the Company.
A Shareholder’s Agreement can be used to regulate how shareholders sell shares, outline shareholder rights on exit, and impose restrictive covenants. Implementing a bespoke Shareholder’s Agreement is a valuable method of establishing the framework and vision of your business and the expectations of not only your company, but the shareholders too.
Our specialist team of Corporate Solicitors have a breadth of experience in drafting complex and unique Shareholder’s Agreements ensuring that each agreement is suitable for the structure and vision of the business involved. Our work also extends to reviewing Shareholder’s Agreements to advise clients whom are party to an existing agreement on their rights and obligations.
Business Exit
Our M&A Team specialise in assisting and advising business owners with selling their businesses in a wide variety of sectors. As a full-service law firm, we are able to offer our clients solutions to a wide range of issues arising at each stage of the transaction. We understand the importance of getting the deal to sell your business correct on the first occasion which is why we work closely alongside our clients to understand what is fundamental to them.
Our Corporate Team has experience with business sales to include:
- Management buy outs
- buy ins (including by way of investment)
- sales to third parties
Our Corporate Team also assist with shareholder exits or removals, be it pursuant to a compulsory share transfer agreement or a share buyout agreement whereby a shareholder has either agreed to leave the business or has been compelled to.
Business Ownership Disputes
Our Dispute Resolution Team advise business owners including partners, LLP members and both majority and minority shareholders on disputes arising from the actions of their fellow business owners.
Dispute between owners, management, and directors of a businesses will have a big impact on the daily running of a business. You may well, as an owner, become embroiled in such a dispute.
We have many years’ experience of relationships breaking down within a business and we will be able to provide you with clear, concise and cost effective advice in finding the best way forward for you.
Our disputes services include:
- Director disputes
- Shareholder disputes
- LLP & Partnership disputes
Key Contact
<script>
document.addEventListener('DOMContentLoaded', function () {
const deptEl = document.getElementById('acf-author-department');
const department = deptEl?.dataset?.department;
if (typeof gtag === 'function' && department) {
gtag('set', { author_department: department });
}
});
window.dataLayer = window.dataLayer || [];
const dept = document.getElementById("author-department")?.textContent?.trim();
if (dept) {
window.dataLayer.push({
event: "authorDataReady",
author_department: dept
});
}
</script>Case Studies
Unlock valuable insights from our case studies
Analysis
Case Study: Streamlining Operations
Learn how we improved efficiency our client
John Doe
24 May 2023
.
5 min read
Analysis
Case Study: Streamlining Operations
Learn how we improved efficiency our client
John Doe
24 May 2023
.
5 min read
Analysis
Case Study: Streamlining Operations
Learn how we improved efficiency our client
John Doe
24 May 2023
.
5 min read
Analysis
Case Study: Streamlining Operations
Learn how we improved efficiency our client
John Doe
24 May 2023
.
5 min read
Analysis
Case Study: Streamlining Operations
Learn how we improved efficiency our client
John Doe
24 May 2023
.
5 min read
Analysis
Case Study: Streamlining Operations
Learn how we improved efficiency our client
John Doe
24 May 2023
.
5 min read
Advising Hawkins Group on transition to an Employee Ownership Trust
The Herrington Carmichael corporate team advised the founders of the Hawkins Group of Companies, a construction group, on the sale…
Herrington Carmichael Advise KGB Cleaning South West Limited on the sale of the entire issued share capital to an EOT
Herrington Carmichael advised the shareholders on the sale of the entire issued share capital of the company to an EOT.
Meet our Service Partners
Dedicated professionals ready to assist you.
Client wins
Frequently Asked Questions
Find answers to your most pressing questions about our services and processes.
Why set up an EOT?
There are many benefits to setting up an EOT, the most common of which include:
- The selling shareholders can release their equity and realise their assets.
- There are numerous tax advantages to both the selling shareholders and the employees for complying with the EOT regulations.
- Creation of employee ownership culture.
- Motivation for current employees and increased retention.
How to set up an EOT?
If you are a shareholder or a group of shareholders considering exiting, we can help you explore whether an EOT is the best option and the next steps to take to implement. If you want to discuss further, please contact Sophie Protheroe in our Corporate team.
Who should be trustees of the EOT?
Provided the sellers do not control the trust, there are no rules about who can be a trustee. We would recommend there is at least one professional trustee alongside members of the management team.
Still have questions?
We’re here to help you!