THE GEARED EMPLOYEE SHARE TRUST - DETAIL

The concept involves the establishment of a special purpose Geared Employee Share Trust (“Geared EST”). The Geared EST obtains loans from external financiers – for example, a bank and/or the Employer.

The Geared EST operates on a similar basis to the EST.

The plan could be made available to:

Chosen Employees who do not have the immediate resources to acquire the number of shares they are offered and would desire as part of equity acquisition and/or succession planning; and

Existing Employees/shareholders who may wish to have the opportunity to acquire additional equity.

The Geared EST allows participants to individually choose their own levels of borrowing.

The Geared EST’s effectiveness is as a fully tax deductible source of external funding. For participating Employees, it provides funding which is repaid out of pre-tax remuneration, without affecting their individual debt exposure.

Different lenders will have different security requirements for the loan.

Security requirements could range from the Geared EST asset-only as security, to the participants providing individual additional security, to the trading enterprise providing additional security.