“SCARRABELOTTI recommends remuneration funding as the most effective method of financing Division 13A Exempt and Deferred share plans; these are then reallocated to the share plan which acquires shares on behalf of employer.”

Aequum Managing Director
Gary Scarrabelotti

Employee benefits  …

'“By investing pre-tax dollars in the ESOP, employees acquire (depending on their marginal tax rate) up to twice the number of shares they could have purchased using post-tax savings.”

Employer benefits ...

“Remuneration funding means, for the employer, a tax deduction to the company for every dollar contributed to the ESOP”

Division 13A Share Plans

Funding '13A' Share Plans

How the plans work

Alternative ESOP Funding Mechanisms

Loan Plans

ESOP Leveraging

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Alternative ESOP Funding Mechanisms

 Share Plans can be funded in various ways using  

• Remuneration;

• Loans;

• ESOP leveraging.

We have already discussed remuneration funding above.

SCARRABELOTTI recommends remuneration funding as the most effective way of to fund a Divisions 13A Exempt or Deferred ESOP.

 We will briefly touch on Loans and ESOP Leveraging below.

• Loan funding means that the company makes loans to individual employees; the loans are then used to acquire the shares in the employer’s company. 
  
  

• Leveraging share plans means that a third party lends to the share plan which uses the borrowed funds to acquire shares in the employer’s company on behalf of the employees.
  
  

Loan Plans

ESOP Leveraging

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