Social and Business Development-(2)
By: Joseph Robert Neil James.
Employees Share OwnershipE
mployees of various medium to large 'Public Limited Companies' (PLC) are allowed topurchase shares from the company via a special purchase scheme. Employees are invitedto pay for the shares on a monthly basis. At the time of purchase the price of the shares, isestablished on the day of purchase, based on the stock market share price value at thatpoint in time'.Once the share price is established employees can pay for the shares over periods from 12months to 5 years. Payment for the shares are deducted from the employees salary everymonth but they do not receive the actual share certificate until the shares are fully paidfor.Example:- let us say the shares price at the point of purchase is£2.00 per share and theemployee wants to purchase 1,000 shares, over the maximum period of 5 year. Thismeans, the monthly payment to be deducted from the employees salary would be£33.33per month. For the purchase of 5,000 shares the payment to be deducted from salarywould be£166.66 per month.After 5 years the employee is given a share certificate for shares purchased and paid for,at the same share price value at thetime they were purchased i.e. 1.000 shares @£2.00per share =£2,000.00. Usually over a 5 year period, share values increase and decreasebut the shares of a PLC company that is 'British Standard' qualified, is a company thatwill be more profitable in the future because to become B.S. qualified, it cost a companyalot of money.Company Shares should double in value every 5 years or even more. This means, with aninvestment of£33.33 per month for 5 years, the shares would be worth £4.00 per share.This also means, the initial 1,000 shares purchased, would have a value of £4,000.00 =100% profit.YES- There is a risks involved because after 5 years, share values could drop to belowthe original purchase price and the share holder would only be able to sell his/her sharesat the lower value. However, if after 5 year shares purchased had dropped below theoriginal£2.00, it would be wise to keep the share certificate, safely stored away, untilthey increased in value.
Leave a Comment