Government announces changes to share buy-back rules for employee ownership sector
The Government is aiming to boost direct employee ownership by announcing changes to cumbersome share buy-back rules.
The changes are intended to ensure the shares of employee-owned firms like John Lewis stay in the hands of the current workforce.
The deregulatory plans will make it easier for share-issuing companies with employee ownership to buy back these shares when a staff member leaves.
Ministers hope reducing the administrative burden of share buy-backs will make the process of reissuing the shares when new employees join a firm more straightforward.
They are also keen to avoid the situation where companies promoting employee ownership can become predominately owned by former employees or others outside the company.
The changes were announced by employment relations and consumer minister Jo Swinson, who also revealed that Thursday 4 July 2013 will be the first national Employee Ownership Day.
The day aims to raise awareness about the employee ownership sector at both national and local level across the UK.
It will also be a chance for those involved in employee-owned businesses to sing the achievements of the sector since 2012's Employee Ownership Summit.
"Hundreds of businesses will benefit from the introduction of reforms that make direct employee ownership easier and simpler for both employers and employees," Ms Swinson said.
"Evidence shows that employee owned companies can be more profitable, create more jobs and were more resilient during the economic downturn.
"We are committed to making direct employee ownership more attractive, cutting red tape for companies, and promoting new and more responsible ways of running a business."
The changes to the Companies Act 2006 will implement one of the key recommendations of the 2012 Nuttall Review of employee ownership.
This follows on from a government consultation into impediments to direct employee ownership.
Company law provisions on the buy backs of company's own shares were overly burdensome and recommended the removal of barriers and disincentives to direct employee ownership, the Nuttall review found.
Employee Ownership Association chief executive Iain Hasdell said he welcomed the changes and the government's commitment to looking at further refinements to it in the future.
Copyright Press Association 2013