SCHEDULES
C1SCHEDULE 5 Employee Share Ownership Trusts
Trustees
F13C
1
This paragraph applies where the trust deed provides that at any time while the trust subsists there must be a single trustee.
2
The trust deed must—
a
be so framed that at any time while the trust subsists the trustee is a company which at that time is resident in the United Kingdom and controlled by the founding company;
b
appoint the initial trustee;
c
contain rules for the removal of any trustee and for the appointment of a replacement trustee.
3
The trust deed must be so framed that at any time while the trust subsists the company which is then the trustee is a company so constituted that the conditions set out in sub-paragraph (4) below are then fulfilled as regards the persons who are then directors of the company; and in that sub-paragraph “the relevant time” is that time and “the trust company” is that company.
4
The conditions are that—
a
the number of directors is not less than three;
b
all the directors are resident in the United Kingdom;
c
the directors include at least one person who is a professional director and at least two persons who are non-professional directors;
d
at least half of the non-professional directors were, before being appointed as directors, selected in accordance with sub-paragraph (7) or (8) below;
e
all the directors so selected are persons who are employees of companies which fall within the founding company’s group at the relevant time, and who do not have and have never had a material interest in any such company.
5
For the purposes of this paragraph a director is a professional director at a particular time if—
a
the director is then a solicitor or a member of such other professional body as the Board may at that time allow for the purposes of this sub-paragraph,
b
the director is not then an employee of any company then falling within the founding company’s group,
c
the director is not then a director of any such company (other than the trust company), and
d
the director meets the requirements of sub-paragraph (6) below;
and for the purposes of this paragraph a director is a non-professional director at a particular time if the director is not then a professional director for those purposes.
6
A director meets the requirements of this sub-paragraph if—
a
he was appointed as an initial director and, before being appointed as director, was selected by (and only by) the persons who later became the non-professional initial directors, or
b
he was appointed as a replacement or additional director and, before being appointed as director, was selected by (and only by) the persons who were the non-professional directors at the time of the selection.
7
Directors are selected in accordance with this sub-paragraph if the process of selection is one under which—
a
all the persons who are employees of the companies which fall within the founding company’s group at the time of the selection, and who do not have and have never had a material interest in any such company, are (so far as is reasonably practicable) given the opportunity to stand for selection,
b
all the employees of the companies falling within the founding company’s group at the time of the selection are (so far as is reasonably practicable) given the opportunity to vote, and
c
persons gaining more votes are preferred to those gaining less.
8
Directors are selected in accordance with this sub-paragraph if they are selected by persons elected to represent the employees of the companies falling within the founding company’s group at the time of the selection.
9
For the purposes of this paragraph a company falls within the founding company’s group at a particular time if—
a
it is at that time resident in the United Kingdom, and
b
it is the founding company or it is at that time controlled by the founding company.
Sch. 5 applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the applying Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 228(7), 235(8), 289 (with ss. 60, 101(1), 171, 201(3))