Employee Share Trusts (ESTs) are a popular way for companies in Australia to provide their employees with a financial stake in the company’s success. ESTs are trusts that hold shares in the company on behalf of the employees, who are the beneficiaries of the trust.
Recent EST trends in Australia have been influenced by a number of factors including changes in tax laws, shifts in the labour market and evolving attitudes towards employee ownership.
One key trend is the increasing use of ESTs by start-up (unlisted) companies, particularly in the technology sector. Many start-ups in Australia are using ESTs as a way to attract and retain talented employees who are often willing to accept a lower salary in exchange for equity in the company.
Another trend is the growing popularity of equity-based compensation schemes such as employee share options plans (ESOPs), Deferred Share plans and Long/Short Term Incentive Plans. These employee share schemes via the EST gives employees the right to purchase or receive shares in the company at a discounted price which can provide a significant financial benefit if the Company performs well.
There has also been a shift towards more flexible and innovative EST structures such as running multiple share plans under the one EST which gives the company a cost effective and flexible vehicle to manage its equity distribution whilst also providing employees with the assurance that their equity investment is safe guarded and managed in accordance with relevant regulations by an appointed Trustee.
Overall, the trend towards greater employee ownership and participation in company ownership is likely to continue in Australia as companies recognise the benefits of ESTs and other equity-based compensation schemes in attracting and retaining top talent.
If you are considering setting up an Employee Share Trust or require assistance with Custody/Nominee or Escrow services, our Head of Trustee Services (Shenali De Silva) would like to speak with you. Please contact Shenali on +61 2 9263 3397 or email
shenali.desilva@linkmarketservices.com.au