Our EOT Dispute Service
EOT Disputes
Implementing an EOT introduces several legal complexities for business owners.
These disputes can arise due to the transition from traditional ownership to employee ownership, impacting various stakeholders.
A key challenge is managing potential conflicts of interest among the parties involved in the ownership transition phase.
For instance, a founder serving as a trustee may face competing priorities. This dual role often causes potential conflicts that can be challenging to manage without clear legal guidance.
Furthermore, disagreements can occur regarding the valuation of the share capital of the company being sold to the EOT, requiring precise legal frameworks to align everyone's goals.
Trustees must take all reasonable steps to ensure the price paid for the shares does not exceed market value, any interest on a deferred element of the purchase price does not exceed a reasonable commercial rate, and that an independent valuation is obtained and relied upon.
Governance must preserve the EOT’s controlling interest (in shares, votes, profits, and assets) and prevent any agreement that might cause a loss of control without trustee consent.
Who we help
We act for EOT trustees (corporate and individual), the company board, founder sellers, shareholders, employee councils and other parties involved in the sale.
We can help where:
- The trust deed or sale contracts are unclear or need re-interpreting.
- A founder or director is also a trustee, and a clear conflict of interest policy is needed.
- Disputes arise over the business valuation, deferred payments, or financial performance targets.
Our team provides legal strategies specifically designed to manage EOT disputes and maintain business operations – protecting the underlying business.
Why choose Myerson after an EOT sale?
- Our legal experts have a wealth of experience in navigating complex EOT claims to secure the best outcome.
- As an employee-owned company ourselves, we understand how an EOT works in practice.
- We have a cross-disciplinary legal team: corporate, dispute resolution, and employment aligned around your business plan to avoid delays and disputes.
- For the past seven years, the Legal 500 has rated us as a Top Tier legal firm.
- We offer a partner-led service to make sure you get the greatest legal counsel and support with a focus on business.
- All of our clients receive free newsletters and webinars that keep them informed about dispute resolution legal developments.
- Check out the Myerson Promise for more information on the benefits of working with us.
Some Example Scenarios (Post-Completion)
- Trustee & Board Information: The trustee requires Management Information (MI) to fulfil its duties, but the company is concerned about sharing sensitive data. We create a practical information-sharing protocol that protects the business whilst satisfying the trustee's requirements. If necessary, we will seek court intervention to force the board to comply with its obligations and share the requisite information.
- Senior Employee Exit: A departing senior employee's situation involves complex HR rules and contract terms. We help align all parties on the correct procedure according to the legal documents, aiming to resolve the matter before it escalates.
Employee Ownership Trust Disputes FAQs
Can a company director also be an EOT trustee?
Yes, this is common. However, it's essential to have a robust conflict of interest policy in place.
This includes clear steps for when a director must step aside from a decision to ensure they can balance their duties to the company with their legal duties to act in the best interests of the EOT and its beneficiaries (being the employees of the company owned by the EOT).
It is also important to ensure, when appointing the trustees, that the EOT maintains its independence from the selling shareholders (they must not form a majority of the trustees and cannot have control of the EOT).
Can the agreed EOT price be revisited if the business underperforms?
It is unlikely that the sale price may be challenged if it is fixed in the share sale agreement. However, where there is an earn-out, the sale agreement may provide a formal process for an independent expert to settle pricing disagreements (this is often referred to as an ‘expert determination’).
We can work with your nominated accountant in working through the expert determination process. This is separate to HMRC challenging the price paid if it feels that it was above market value – which would be in breach of the EOT rules / legislation and so risks prejudicing the tax advantages attached to the EOT structure.
When should a trustee seek court directions?
A trustee may seek guidance (or direction) from the court when they are uncertain about their duties or how to handle a particular issue. This formal process (by way of an application under Part 64 of the Civil Procedure Rules 1998) provides clear guidance on how to proceed.
Crucially, it can also protect the trustee from being personally liable for legal costs (known as ‘Beddoe relief’). It represents a sensible step when the way forward may be unclear.
Good governance of the EOT (and the company) should help in giving trustees the right guidance and toolkit to enable the right decisions to be made. Trustees can also attend courses and training to help them in what canbe a challenging role at times.
Can reserved matters be changed after completion?
Yes, the list of key decisions requiring specific approval (‘reserved matters’) from the selling shareholders can be changed.
Any amendments must still comply with the wider terms of the original sale contract, the trust deed, and HMRC’s rules.
Most importantly, the core EOT conditions must always be met: the trust must keep a controlling interest in the company, all employees must continue to benefit equally and the selling shareholders should not exert control (directly or indirectly) over the trust.
In respect of the latter, it is normal for a selling shareholder who has deferred consideration due over a number of years, to have a right to veto material/fundamental matters relating to the company – however, this should not go beyond what is necessary and advice should be sought to ensure such matters do not breach the EOT rules.
How should ‘bad leaver’ cases be handled for employees or managers?
Follow the process in the relevant rules, the articles and the employment contract.
Document the reasons, apply the criteria consistently, and take legal advice before action to reduce unfairness/constructive dismissal risk.
What if a selling shareholder becomes a ‘bad leaver’?
Apply the sale agreement’s leaver provisions and payment mechanics.
We can assess the contractual triggers, the impact on deferred consideration, and any conflicts for trustee/directors, ensuring compliance with the EOT rules so that the trust’s control and tax treatment are not jeopardised.
Testimonials
Mr. Blakey
Fantastic service as always from Myerson. The quick communication makes all the difference.
Jack
Like most people I don't find myself in situations that require a solicitor very often. So, the process can feel a little intimidating and daunting when it does come up. But, Suzanne at Myserson was both professional and supportive during my case - giving me excellent, informed and realistic advice which gave me the reassurance to successfully resolve my case.
Legal 500
The team at Myerson are very effective, dynamic, ambitious and very personable. A very cohesive and positive team that consistently achieve excellent results for their clients. The team consistently rise to the challenges presented by challenging cases.
Richard
Myerson have helped us with successful outcomes in legal disputes, contract negotiations and re-writing our Terms & Conditions. We have always found their service to prompt, positive and in relatively simple terms. I have entire confidence that they are giving me sound advice. I would fully recommend their services and we feel well protected in the future.
Legal 500
They have the personal and connected touch only a small firm can have. However, they have the expertise you would normally only expect from a big firm. The best of both worlds.
Carl
The guys at Myerson Solicitors made what could have been a very tricky and stressful case much easier to deal with. Very professional in their approach but also friendly and informative. Their advice from start to finish was extremely sound and they managed to achieve a very successful outcome.
Legal 500
The commercial litigation team at Myersons is a regional team doing national level work – with aplomb.
Olivier
My French company, an international textiles sales agency, was involved in a difficult breach of contract with one of its UK client. Difficult because an expertise was needed in this field of activity; difficult because our client took an approach which wasn't decent to say the least. Myerson debated very professionally and defended our position strongly up to win our case considering the results obtained before we needed to go to court. I will recommend Myerson to my other French agents colleagues.
Malcolm
Used Myerson for a business contract dispute that I had. The matter is now concluded to my total satisfaction. In one word Meyerson were amazing. From evaluating expectations, to giving good direction and magnificent advice I was, and am, impressed.
Legal 500
Great reputation as one of the better dispute resolution teams in the North West Excellent team with an all-round attention to detail.
Jill
The help we have received advising us on commercial agents' contracts has been hugely beneficial. In particular, Suzanne has helped us with the exit of an agent from the business. This has been handled with great professionalism and calm, direct advice, which has supported us through a very delicate process. With Suzanne's help we have reached a mutually agreeable outcome and we are happy that this gentleman can leave the business without any animosity, which was our definite preference.
Freyja Handy - Senior Vice President & General Counsel (Europe), ASM Global
We’ve had an excellent experience working with Myerson in relation to a number of disputes. They were highly responsive, pragmatic and maintained a strong commercial and cost-conscious focus throughout. Their advice was always clear I wouldn’t hesitate to recommend the dispute resolution team to others seeking reliable and commercially minded legal support.
Legal 500
A dynamic, personable and highly effective team with tremendous strength in depth. This team consistently achieves excellent results for their clients. Clients benefit from the positive approach of the team at Myerson, however challenging the dispute.
Mr. William
Fantastic service as always. Quick, clear and honest communication. The team is very supportive which is exactly what’s needed when going through any legal scenario. I highly recommend this company.
Legal 500
Suzanne Carr is an immensely talented litigator who is adept at steering disputes to a successful conclusion and remaining focused on the key issues.
Legal 500
Adam Maher and his team are pros. Adam is an intellectual powerhouse. He stays calm under pressure yet remains focused, confident and motivated to produce the best results. He has great attention to detail and won’t take any nonsense. Good integrity and can argue well.
Legal 500
My view is that this firm is one of the best, focused, strategic and hardworking outfits in the region; with attention to detail and a laser sharp focus on the case at hand, you absolutely want them on your side in any piece of challenging commercial litigation. They will give most London law firms a run for their money.
Legal 500
Sven Clarke is a superstar. He has the rare mix of legal clout and commercial nous. He's a formidable opponent.
Legal 500
Adam Mayer leads a team of talented lawyers. The team give pragmatic advice, but are not afraid of taking on difficult cases. Particularly strong with regards to shareholder and partnership issues, showing an excellent grasp of the law and the nuances of dealing with interpersonal business disputes.
Legal 500
The commercial disputes team punches well above its weight - easily going toe-to-toe with London firms in contractual and shareholder disputes.
Legal 500
Adam Mayer combines excellence in his specialist area of law with being very approachable. He is commercial and pragmatic, but will still fight your corner.
Legal 500
This team is outstanding in its strength in depth, positivity, teamwork and client care skills. A “can do” attitude runs throughout the team from partner to trainee and the team is very cohesive. Particular depth of experience in shareholder disputes.
Ms Wilson
Amna Iqbal and David Jones have been exceptional with their support and advice during what has been a very difficult case.
Legal 500
Adam Maher is an outstanding leader and litigator. His strategic vision is excellent, his legal analysis is first-rate and his leadership of the team is always very positive, leading to excellent results.
Boti
Myerson Solicitors helped me retrieve 50K compensation from FSCS over poor financial advice I had received with regards to my pension. I received professional and efficient service throughout the process. All my calls and emails were responded to promptly. I was going to use Myerson Solicitors on a no win no fee basis. They advised me against it as they thought I will be paying a lot more and I have a reasonable chance for a successful outcome. They were absolutely right and I am glad that I trusted them.
Legal 500
Sven Clarke is a real stand-out – he’s a dream to work with, extremely bright, and unflappable.
Meet Our Dispute Resolution Team
Contact Our Experts
You can contact our lawyers below if you have any more questions or want more information:
0161 941 4000
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