Final Report of the Nuttal Review of Employee Ownership

11th July 2012

On 4 July 2012, the Department for Business, Innovation and Skills published the final Report of the Nuttall Review of Employee Ownership.  

The Government is committed to increasing the number of UK companies where all or most employees have an ownership stake, and commissioned this Review on how this might be achieved. Referring to evidence from, for example, Cass Business School, it believes wider employee share ownership has the potential to create stronger performing and more resilient companies.

The Report identifies three key barriers:

  • A lack of awareness among companies and their advisers
  • A lack of sources of finance
  • The perceived complexity of employee ownership

The Report makes several recommendations, which include that the Government should:

  • Invite views on the introduction of a new statutory right for employees to request consideration by their employers of employee ownership proposals.
  • Create simplified ‘off the shelf’ models of an employee-owned company which reduce the complexity and uncertainty of the process. These models should include templates for articles of association for an employee-owned company and related documents.
  • Establish a steering group to advise the Minister on the views of the employee ownership sector.
  • Identify ways for accountants, lawyers and other business advisers to develop their knowledge of this area, its benefits and available structures and solutions.

The Report also advocates better promotion of the various sources of finance that can be well-suited to employee-owned companies, and a review of tax policy to ensure that complexity is minimised. However, while the Report refers to evidence that the tax system can be used to make employee ownership and participation more attractive, it does not make any specific proposals regarding possible tax incentives to be considered by the Government to encourage wider employee ownership.

You can read the final Report on the BIS website by clicking on the link below:

http://www.bis.gov.uk/policies/business-law/employee-ownership

You can also read the Cass Business School Report “The Employee Ownership Advantage” published July 2012 by clicking on the following link:

http://www.bis.gov.uk/assets/biscore/business-law/docs/e/12-929-employee-ownership-advantage-benefits-and-consequences

The Government will formally respond to the Report in autumn 2012.

If you or your clients would like to discuss the impact of these provisions please contact:

Robert Postlethwaite rmp@postlethwaiteco.com

David Reuben dgr@postlethwaiteco.com

Stephen Chater spc@postlethwaiteco.com

Judith Harris jdh@postlethwaiteco.com