Imagine reaching the pinnacle of your salary as an employee and being presented with the chance to buy shares in the company you work for. It’s an enticing opportunity, but the financial commitment can be daunting.

For both the employer and the employee, structuring the purchasing arrangement is pivotal. Here’s a breakdown of some common methods:

Cash Purchase:

Traditionally, employees would buy shares using their savings. However, with mounting student debts and economic uncertainties, this option is becoming less feasible.

Company Loan:

The business may extend a loan to the employee, which can be repaid from future dividends or drawings. This loan could be sourced from the company’s capital or through bank borrowing.

Bank Loan:

Employees can secure funds from a bank, often with the company or partnership providing a guarantee. The borrowed amount is then used to buy shares.

Staged Purchase:

This increasingly popular approach involves gradual acquisition of shares over time. Initially, the employee may purchase a small shareholding with cash, gradually progressing to larger stakes as they meet performance targets.

Each stage of the purchase may come with increased responsibilities and voting rights, eventually leading to full ownership rights.

Navigating these options requires legal and accounting expertise. Seeking advice ensures the structure benefits both parties involved.

If you’re contemplating buying into the business you work for, consulting with legal and financial experts can help tailor a suitable arrangement. Reputable law firms often offer fixed-price initial consultations to guide you through your options efficiently and cost-effectively.

Need a bit of legal assistance? Contact a Corelegal team member today and learn more about our legal services. You won’t regret it.