THE EXEMPT SHARE OPTION TRUST

The concept involves the establishment of a special purpose Exempt Share Option Trust (ESOT).  The ESOT receives contributions from the Employer and purchases Share Options from the Employer or from other shareholders.  When Share Options are encashed, Shares are held in Trust for the benefit of the participating Employees.  Employees are in turn issued with entitlements to Shares held in the Trust.  The Trust Deed and the particular terms of issue of the Investment Units govern their entitlements to the Share benefits.

As the Share Options are warehoused in a dedicated Plan Trust.

EMPLOYER TYPE

• Private Companies.
• Public Companies (in some cases).

STRATEGY

• Retention Strategy.
• Wealth Creation.

ADVANTAGES

• The $1,000 per annum allocation of shares is tax exempt, any capital profit (i.e. over $1,000) on shares held for more than 12 months are 50% tax exempt.
• The plan is attractive as a general employee share plan, offered to all permanent full time Employees.
• The ESOT makes offers of Share Options on non-discriminatory terms to at least 75% of the permanent employees nominated by the Employer.
• Investment choice is limited to ordinary shares of the Employer.
• Shares Options must be fully vested.  Attractive as a means of delivering equal, vested, profit share benefits.
• Funding by the Employer is made as deductible Employer contributions as money or fresh issues of Share Options.
• Termination of employment not necessarily a trigger for sale of shares.
• As no gearing by Employees, is required, the plan provides a controlled downside risk protection for Participating Employees.
• Fully outsourced administration.