Employee ownership and share buy backs - consultation on implementation of Nuttall Review recommendations

EMPLOYEE OWNERSHIP

Employee ownership and share buy backs - consultation on implementation of Nuttall Review recommendations

The Department for Business, Innovation and Skills launched on 30 October 2012 a consultation exercise seeking views on proposed changes to company law under which companies can authorise and finance the repurchase of its own shares, and hold these shares once repurchased. The consultation period will remain open until 16 November 2012.

The Nuttall Review on Employee Ownership recommended (Recommendation V) that the government should review and consult on changes to deregulate the conditions under which companies can:

authorise share buy backs
finance share buy backs
hold shares “in treasury”.

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Government plans to boost employee ownership

This consultation was accompanied by the government’s formal response to the Nuttall Review. The government is embarking upon a programme of work to implement the employee ownership agenda set by the Nuttall Review. The government has approved plans for a range of activity that will “help to grow the number of businesses that become or convert to the employee ownership model”.

The plans include:

assessing whether to establish an independent Institute for Employee Ownership
an “off the shelf” model for setting up an employee-owned business
work to examine the guidance on tax issues relating to employee ownership
a guide for staff and employers to request and agree an employee ownership takeover
work with the John Lewis Partnership to examine the barriers to funding for private sector employee owned companies.

The government has also asked Graeme Nuttall to publish a “one-year on” report on the progress made on delivering his recommendations.

Want to know more?

The Nuttall Review - or to give it its full title, "Sharing Success: The Nuttall Review of Employee Ownership" - was published 4 July 2012. It summarises the existing research literature on the benefits of employee ownership, identifies the key barriers to uptake of employee ownership and makes a number of recommendations of how to reduce these barriers. It is available at www.bis.gov.uk/policies/business-law/employee-ownership.

The government’s response and consultation on deregulating share buy-backs is available at www.bis.gov.uk/policies/business-law/employee-ownership.