Companies with employee ownership will welcome deregulatory changes.

Changes to share buy-back rules aimed at boosting direct employee ownership and cutting red tape have been announced by the government. 

Under the new rules, companies with employee ownership that issue shares directly to their employees will find it easier to buy back these shares when an employee leaves. The company will then be able reissue these shares more easily when new employees join.

It is intended that these deregulatory changes will reduce the administrative burden of share buy-backs, allowing companies to avoid the situation where companies promoting employee ownership can become predominately owned by former employees or others outside the company.

Employment relations and consumer minister Jo Swinson also announced that Thursday 4 July 2013 will be the first national Employee Ownership Day, which aims to raise awareness of the employee ownership sector at both national and local level across the UK.

Swinson says that hundreds of businesses will benefit from the introduction of reforms that make direct employee ownership easier and simpler for both employers and employees.

She says, ‘Evidence shows that employee-owned companies can be more profitable, create more jobs and were more resilient during the economic downturn. We are committed to making direct employee ownership more attractive, cutting red tape for companies, and promoting new and more responsible ways of running a business.

‘I hope these changes, alongside the announcement of an Employee Ownership Day on 4 July, will raise awareness of the benefits of employee-owned companies and lead to an increase in the number of direct employee owned firms across the UK.’

Author of the Nuttall Review and partner at Field Fisher Waterhouse LLP Graeme Nuttall says, ‘These significant changes in company law will bring employee ownership to the attention of a wider audience. 

‘The changes will provide many companies with a less expensive and simpler way to run an internal share market for employees’ share schemes.’