The Employee Share Schemes Bill was introduced in the House of Commons on 18th July 2001.
It received Royal Assent and became law on 7th November 2002

The EMPLOYEE SHARE SCHEMES ACT 2002 ("ESSA") received Royal Assent on 7th November 2002. It came into force on 6th April 2003.

A Private Member's Employee Share Schemes Bill was introduced into the House of Commons by Mark Lazarowicz MP, on 18th July 2001, headed a "Bill to make provision relating to employee share schemes; and for connected purposes". The Act comes into force on 6th April 2003 (s.5)

The Act extends the existing rule that corporation tax relief in respect of a share incentive scheme is allowed in the year shares are distributed to employees by also allowing an early corporation tax deduction for money paid to "Share Incentive Plan trustees" from 6th April 2003 subject to conditions. notably that:

• the trustees use the money to acquire shares in the company. At least 10% of the total ordinary share capital of the company must be acquired within a year of the initial purchase of shares made with this money.

• at least 30% of the shares acquired with the payment must be transferred to employees within 5 years, and all the shares must be transferred within 10 years.

The Act also extends exemptions from income tax on dividends and capital gains tax on share disposals so that the exemptions will apply for the same 10 year period.

The Act, by s.1(2), enables companies to involve employees more closely in the operation of the Share Incentive Plan by setting up a board of trustees for the Plan which may include employee representatives. The provision provides a framework for this. It is not obligatory.

A summary of the contents of the Act is available in 2002/11/08 - Inland Revenue Press Release 68/02 summary of the Employee Share Schemes Act 2002.