On 9 February 2015, HMRC confirmed in its latest employment-related securities bulletin that the Department for Business Innovation & Skills (BIS) regarded existing shares as eligible for employee shareholder arrangements.

Specifically, the latest bulletin states that:

“In response to a number of enquiries, BIS has confirmed that companies making employee shareholder agreements can use existing shares to satisfy the requirement, in section 205A of the Employment Rights Act 1996, that they ‘issue or allot’ shares with a value of at least £2,000 to an employee shareholder. It is not necessary for the company to issue new shares.”

The HMRC bulletin can be viewed here