Introduction
An Employee Benefit Trust (EBT) is a legal arrangement where companies place shares in a trust for their employees' future benefit. The shares are held by either a trustee (in a formal trust structure) or a nominee (in a nominee arrangement) until specific conditions are met. Both structures offer flexibility in equity distribution while providing potential tax advantages in certain jurisdictions.
This guide will walk you through setting up an EBT in Ledgy, whether you're using a formal trust with trustees or a nominee arrangement. The process mirrors creating a standard equity pool and plan, with the key distinction that a trustee or nominee holds the legal rights while employees are designated as beneficiaries within the grants.
Overview of the EBT Setup Process in Ledgy
Creating a Pool designated for the EBT
Adding the Trustee or Nominee as a stakeholder in Ledgy
Setting up an Equity Plan under the EBT pool
Granting equity to employees as beneficiaries
Let's walk through each step in detail.
Step 1: Creating an EBT Pool
Navigate to Equity Plans > Pools & Plans page
Click on the "Add pool" button in the top right corner
Fill out the relevant fields:
Name your pool (e.g., "EBT Pool 2025" or "Nominee Pool 2025")
Enter the creation date
Select the underlying share class
Specify the amount of fully diluted shares allocated for grants
Note: This amount should reflect the initial allocation at the time of pool creation, not necessarily the current allocation
Optional: upload any relevant documents (trust deed or nominee agreement) or add internal notes related to the EBT
Click Save
Step 2: Creating an Equity Plan Under the EBT Pool
Go to the Equity Plans > Pools & Plans page
Click on the "Add plan" button in the top right corner
Fill out the plan details:
Enter a descriptive plan name (e.g., "EBT Equity Plan 2025" or "Nominee Equity Plan 2025")
Select the creation date
Choose the EBT pool you created in Step 1
Select the appropriate grant type
Optionally, set up Grant presets to define standard parameters for grants under this plan (e.g., vesting schedule, exercise price, document templates)
Click Save
Step 3: Adding the Trustee/Nominee and Employees as Stakeholders
Both the trustee/nominee (who holds legal title to the shares) and the employees (who are the beneficial owners) need to be added as stakeholders in Ledgy.
Despite employees not being direct legal stakeholders in an EBT structure, they need to be added to Ledgy to be involved in transactions.
Think of the Stakeholders page as a central repository of all economic agents and their details, rather than just a list of legal shareholders.
Option A: Adding a single Trustee/Nominee or Employee
Go to the Stakeholders page
Click on the Add stakeholder button
Provide the name of the stakeholder (trustee/nominee or employee)
Select Legal entity for trustees/nominees or Natural person for employees
Fill out any additional required fields
Click Save
Repeat as needed for all stakeholders
Option B: Importing multiple Trustees/Nominees or Employees via Excel import
On the Stakeholders page, click on the Import button in the upper right corner
Select the template for Legal entity (for trustees/nominees) or Natural person (for employees)
Click Download template to get the Excel template
Fill in the details for the trustees/nominees or employees
Save the Excel file
Upload the file by dragging and dropping it into the import box or clicking on the Excel icon
Click Import now
Step 4: Granting Equity to Employees as Beneficiaries
When setting up grant transactions, you'll assign the trustee or nominee as the legal holder while specifying employees as beneficiaries:
Go to the Ownership > Transactions page
Click on Import at the top and select "Option, Phantom, or Warrant" template
Download the Excel template
In the template, for each grant:
Specify the trustee or nominee as the stakeholder receiving the grant
In the Beneficiary column, enter the employee who will be the beneficial owner
Specify the plan as the Plan you created in Step 3
Fill in any other required details (grant date, amount, etc.)
If your plan has presets configured, you can leave relevant columns blank to use those default values
To override any plan presets for specific grants, simply populate the relevant columns
Save the Excel file and upload it to Ledgy
Review the imported grants and confirm they're correct
Cap table reporting
Ledgy's cap table functionality provides flexible reporting options that are particularly valuable for EBT structures. By default, the cap table groups equity by Stakeholder however, you can customise your view to gain deeper insights into your EBT structure:
Customising the Cap Table View
Navigate to your cap table view via Ownership > Cap Table
In the cap table grid, enable the Beneficiary column via the Columns menu on the right
Scroll to the far-right of the grid and drag and drop the Beneficiary column header just above the grid next to the Stakeholder grouping
Expand all rows by clicking 'Expand All' to display both nominees and economic rights holders
You can save the custom grid view by clicking 'Save as new view'.
Tracking EBT Loans and Repayments in Ledgy
Ledgy allows you to track both the initial loan from your company to the EBT and all subsequent repayment transactions, giving you a complete view of the EBT's cash flows and outstanding loan balance.
How EBT loan tracking works
You'll use two transaction types to model the complete loan lifecycle:
Payout transactions record cash flowing from your company to the EBT trustee (the initial loan).
Payback transactions record cash flowing from the EBT trustee back to your company (loan repayments).
When you view these transactions together in reports, Ledgy automatically calculates the remaining loan balance by aggregating all payouts and paybacks.
Recording the initial loan to the EBT
To record the initial loan your company provides to the EBT:
Navigate to Ownership > Transactions
Click on Add transaction in the top right corner
Select Payout from the transaction type options
Fill in the transaction details:
Stakeholder: Select the trustee or nominee
Amount: Enter the total loan amount
Currency: Select the appropriate currency (e.g., GBP, USD, EUR)
Date: Enter the date when the loan was provided
Optional: Add a custom field to label this as "Initial Loan" or "EBT Loan" for easier tracking
Click Save and then Publish
The payout transaction will show as a positive cash flow from your company to the trustee.
Recording loan repayments from the EBT
To record each repayment the EBT makes back to your company:
Navigate to Ownership > Transactions
Click on Add transaction in the top right corner
Select Payback from the transaction type options
Fill in the transaction details:
Stakeholder: Select the same trustee or nominee
Amount: Enter the repayment amount for this installment
Currency: Select the same currency used for the initial loan
Date: Enter the scheduled repayment date
Optional: Add a custom field to label this as "Loan Repayment" or "Repayment - Q1 2025" for easier identification
Click Save and then Publish
The payback transaction will show as a negative cash flow from the trustee back to your company.
Repeat this process for each scheduled repayment installment.
Viewing your EBT loan status
You can track the complete loan status and remaining balance using Ledgy's reporting features:
Navigate to Reporting > Operational
Select the Transactions report
Filter the report to show only the specific trustee's transactions
The report will display:
The initial payout (positive cash flow) showing the original loan amount
All payback transactions (negative cash flow) showing each repayment
An aggregated total showing the remaining outstanding loan balance
Creating a custom EBT overview report
For easier ongoing tracking, you can save a custom report view:
In the Transactions report, apply filters to show:
Stakeholder: Your EBT trustee
Transaction types: Payout and Payback
Add the custom field column if you're using labels like "Initial Loan" or "Repayment"
Click Save view and name it something descriptive like "EBT Loan Overview - [Trustee Name]"
This saved view gives you instant access to see:
The original loan amount and date
All repayments made to date with their amounts and dates
The current outstanding balance
Your custom labels distinguishing loans from repayments
Example: Tracking a typical EBT loan
Here's how a typical EBT loan structure would appear in Ledgy:
Initial loan (1 January 2024)
Transaction type: Payout
Amount: £1,000,000
Cash flow: +£1,000,000
Status: Initial Loan
Quarterly repayments
1 April 2024: Payback of £250,000 (Cash flow: -£250,000)
1 July 2024: Payback of £250,000 (Cash flow: -£250,000)
1 October 2024: Payback of £250,000 (Cash flow: -£250,000)
Remaining balance: £250,000
By viewing all these transactions together in your saved report, you can instantly see the repayment progress and outstanding balance at any point in time.