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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 6 — Requirements etc. relating to share options

    413

 

Exercise of options: death

  32       The scheme must provide that, if a participant dies before exercising the

options, they may be exercised on or after the date of death but not later

than—

              (a)             12 months after the date of death, in a case where the participant dies

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before the bonus date, or

              (b)             12 months after the bonus date, in a case where the participant dies

on or within 6 months after that date.

Exercise of options: reaching specified age without retiring

  33      (1)      The scheme must provide that, if a participant (“P”) continues to hold the

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office or employment by reference to which P satisfies the condition in

paragraph 10(1) (the employment requirement) after the date on which P

reaches the specified age, P may exercise the options within 6 months of that

date.

          (2)      This paragraph has effect subject to paragraph 30(1)(b) (options must not be

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capable of being exercised later than 6 months after bonus date).

Exercise of options: scheme-related employment ends

  34      (1)      The scheme must provide that, if a participant (“P”) no longer holds scheme-

related employment (see paragraph 35), the options are exercisable as set out

in sub-paragraphs (2) to (4).

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          (2)      In a case where P ceases to hold the scheme-related employment because

of—

              (a)             injury or disability or redundancy within the meaning of ERA 1996,

or

              (b)             retirement on reaching the specified age, or any other age at which P

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is bound to retire in accordance with the terms of P’s contract of

employment,

                   the options may only be exercised within 6 months after the termination

date.

          (3)      In a case where P ceases to hold the scheme-related employment for any

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other reason, share options granted more than 3 years before the termination

date either—

              (a)             may not be exercised, or

              (b)             may only be exercised within 6 months after the termination date,

                   according to which of these alternatives is specified in the scheme.

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          (4)      Subject to any provision made under sub-paragraph (5), in a case where P

ceases to hold the scheme-related employment for any reason other than one

within sub-paragraph (2)(a) or (b), share options granted 3 years or less

before the termination date may not be exercised at all.

          (5)      The scheme may provide that, in a case where P ceases to hold the scheme-

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related employment only because—

              (a)             it is in a company of which the scheme organiser ceases to have

control, or

              (b)             it relates to a business or part of a business which is transferred to a

person who is not an associated company of the scheme organiser,

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Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 6 — Requirements etc. relating to share options

    414

 

                   the options may be exercised within 6 months after the termination date.

          (6)      This paragraph has effect subject to paragraph 30(1)(b) (options must not be

capable of being exercised later than 6 months after bonus date).

          (7)      In this paragraph—

               “scheme-related employment” means the office or employment by

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reference to which the person satisfies the condition in paragraph

10(1) (“the employment requirement”);

               “the termination date” means the date when P ceases to hold the

scheme-related employment (see paragraph 35).

Time when scheme-related employment ends

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  35      (1)      This paragraph applies for the purposes of paragraph 34 (exercise of

options: scheme-related employment ends).

          (2)      Unless sub-paragraph (3) applies, a participant (“P”) is to be regarded as

ceasing to hold scheme-related employment on the date when the office or

employment in question terminates.

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          (3)      If —

              (a)             P’s scheme-related employment terminates, but

              (b)             P continues to hold an office or employment in the scheme organiser

or any associated company,

                   P is to be regarded as ceasing to hold the scheme-related employment on the

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date when P no longer holds any office or employment within paragraph (b),

and not at any earlier time.

          (4)      For the purposes of sub-paragraph (3) one company is an “associated

company” of another company if—

              (a)             one has control of the other, or

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              (b)             both are under the control of the same person or persons;

                   and for this purpose the question of whether a person controls a company is

to be determined in accordance with section 416(2) to (6) of ICTA (“control”

in the context of close companies).

          (5)      Nothing in paragraph 34 or this paragraph applies where a person’s

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scheme-related employment terminates on that person’s death (see instead

paragraph 32).

          (6)      In this paragraph “scheme-related employment” has the same meaning as in

paragraph 34.

Exercise of options: employment in associated company at bonus date

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  36       The scheme may provide that if at the bonus date a participant holds an

office or employment in a company which is—

              (a)             an associated company of the scheme organiser, but

              (b)             not a constituent company,

           the options may be exercised within 6 months after that date.

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Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 7 — Exchange of share options

    415

 

Exercise of options: company events

  37      (1)      The scheme may provide that share options relating to shares in a company

may be exercised within 6 months after the relevant date for the purposes of

sub-paragraph (2), (4) or (5).

          (2)      The relevant date for the purposes of this sub-paragraph is the date when—

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              (a)             a person has obtained control of the company as a result of making

an offer falling within sub-paragraph (3), and

              (b)             any condition subject to which the offer is made has been satisfied.

          (3)      An offer falls within this sub-paragraph if it is—

              (a)             a general offer to acquire the whole of the issued ordinary share

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capital of the company, which is made on a condition such that, if it

is met, the person making the offer will have control of the company,

or

              (b)             a general offer to acquire all the shares in the company which are of

the same class as the shares in question obtained under the scheme.

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          (4)      The relevant date for the purposes of this sub-paragraph is the date when the

court sanctions under—

              (a)             section 425 of the Companies Act 1985 (c. 6) (power to compromise

with creditors and members), or

              (b)             Article 418 of the Companies (Northern Ireland) Order 1986 (S.I.

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1986/1032 (N.I. 6)) (corresponding provision for Northern Ireland),

                   a compromise or arrangement proposed for the purposes of or in connection

with a scheme for the reconstruction or amalgamation of the company.

          (5)      The relevant date for the purposes of this sub-paragraph is the date when the

company passes a resolution for voluntary winding up.

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          (6)      The scheme may provide that share options relating to shares in a company

may be exercised at any time when any person is bound or entitled to

acquire shares in the company under—

              (a)             sections 428 to 430 of the Companies Act 1985 (power to acquire

shares of shareholders dissenting from schemes or contract

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approved by majority), or

              (b)             Articles 421 to 423 of the Companies (Northern Ireland) Order 1986

(S.I. 1986/1032 (N.I.6)) (corresponding provision for Northern

Ireland).

          (7)      For the purposes of this paragraph—

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              (a)             “share options” means share options granted under the scheme; and

              (b)             a person is to be treated as obtaining control of a company if that

person and others acting in concert together obtain control of it.

          (8)      This paragraph has effect subject to paragraph 30(1)(b) (options must not be

capable of being exercised later than 6 months after bonus date).

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Part 7

Exchange of share options

Exchange of options on company reorganisation

  38      (1)      An SAYE option scheme may provide that if—

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 7 — Exchange of share options

    416

 

              (a)             there is a company reorganisation affecting a scheme company (that

is, a company whose shares may be acquired by the exercise of share

options obtained under the scheme: see paragraph 18), and

              (b)             a participant has obtained share options under the scheme which are

to acquire shares of the scheme company (“the old options”),

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           the participant may agree with the acquiring company to release the old

options in consideration of the participant being granted new share options.

          (2)      For the purposes of this paragraph there is a company reorganisation

affecting a scheme company if another company (“the acquiring

company”)—

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              (a)             obtains control of the scheme company—

                    (i)                   as a result of making a general offer to acquire the whole of

the issued ordinary share capital of the scheme company

which is made on a condition such that, if it is met, the person

making the offer will have control of that company, or

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                    (ii)                  as a result of making a general offer to acquire all the shares

in the scheme company which are of the same class as those

subject to the old options;

              (b)             obtains control of the scheme company as a result of a compromise

or arrangement sanctioned by the court under—

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                    (i)                   section 425 of the Companies Act 1985 (c. 6) (power to

compromise with creditors and members), or

                    (ii)                  Article 418 of the Companies (Northern Ireland) Order 1986

(S.I. 1986/1032 (N.I. 6)) (corresponding provision for

Northern Ireland); or

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              (c)             becomes bound or entitled to acquire shares in the scheme company

under—

                    (i)                   sections 428 to 430 of that Act (power to acquire shares of

shareholders dissenting from schemes or contract approved

by majority), or

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                    (ii)                  Articles 421 to 423 of that Order (corresponding provision for

Northern Ireland).

          (3)      A scheme that makes provision under sub-paragraph (1) must require the

agreement referred to in that sub-paragraph to be made—

              (a)             where control is obtained in the way set out in sub-paragraph

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(2)(a)(i) or (ii), within the period of 6 months beginning with the time

when the acquiring company obtains control and any condition

subject to which the offer is made is met,

              (b)             where control is obtained in the way set out in sub-paragraph (2)(b),

within the period of 6 months beginning with the time when the

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court sanctions the compromise or arrangement, and

              (c)             where sub-paragraph (2)(c) applies, within the period during which

the acquiring company remains bound or entitled as mentioned in

that provision.

Requirements about share options granted in exchange

45

  39      (1)      This paragraph applies to a scheme that makes provision under paragraph

38 (exchange of options on company reorganisation).

          (2)      The scheme must require the new share options to relate to shares in a

company which—

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 8 — Approval of schemes

    417

 

              (a)             is different from the company whose shares are subject to the old

options, and

              (b)             is either the acquiring company itself or some other company within

sub-paragraph (b) or (c) of paragraph 18 (shares must be ordinary

shares of certain companies), namely—

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                    (i)                   a company which has control of the scheme organiser, or

                    (ii)                  a company which is, or has control of a company which is, a

member of a consortium owning either the scheme organiser

or a company having control of the scheme organiser.

                              For this purpose the control in question may be through the medium

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of the acquiring company.

          (3)      The scheme must also require the new share options to be equivalent to the

old options.

          (4)      For the new options to be regarded as equivalent to the old options—

              (a)             the shares to which they relate must meet the conditions in

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paragraphs 18 to 22 (types of share that may be used),

              (b)             they must be exercisable in the same manner as the old options and

subject to the provisions of the scheme as it had effect immediately

before the release of the old options,

              (c)             the total market value of the shares subject to the old options

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immediately before the release of those options by the participant

must equal the total market value, immediately after the grant of the

new options to the participant, of the shares subject to those options,

and

              (d)             the total amount payable by the participant for the acquisition of

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shares under the new options must be equal to the total amount that

would have been so payable under the old options.

          (5)      For the purposes of the SAYE code, new share options granted under the

terms of a provision included in a scheme under paragraph 38 are to be

treated as having been granted at the time when the corresponding old

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options were granted.

          (6)      This also applies for the purposes of the provisions of the scheme in their

operation, after the grant of the new options, by virtue of a condition

complying with sub-paragraph (4)(b).

Part 8

35

Approval of schemes

Application for approval

  40      (1)      Where—

              (a)             an SAYE option scheme has been established, and

              (b)             the scheme organiser makes an application to the Inland Revenue for

40

approval of the scheme,

                   the Inland Revenue must approve the scheme if they are satisfied that it

meets the requirements of Parts 2 to 7 of this Schedule.

          (2)      An application for approval —

              (a)             must be in writing, and

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Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 8 — Approval of schemes

    418

 

              (b)             must contain such particulars and be supported by such evidence as

the Inland Revenue may require.

          (3)      Once the Inland Revenue have decided whether or not to approve the

scheme, they must give notice of their decision to the scheme organiser.

Appeal against refusal of approval

5

  41      (1)      If the Inland Revenue refuse to approve the scheme, the scheme organiser

may appeal to the Special Commissioners.

          (2)      The notice of appeal must be given to the Inland Revenue within 30 days

after the date on which notice of their decision was given to the scheme

organiser.

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          (3)      If the Special Commissioners allow the appeal, they may direct the Inland

Revenue to approve the scheme with effect from a date specified by the

Commissioners.

          (4)      The date so specified must not be earlier than that of the application for

approval.

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Withdrawal of approval

  42      (1)      If any disqualifying event occurs in connection with an approved SAYE

option scheme, the Inland Revenue may by a notice given to the scheme

organiser withdraw the approval with effect from—

              (a)             the time at which the disqualifying event occurred, or

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              (b)             a later time specified by the Inland Revenue in the notice.

          (2)      A “disqualifying event” occurs in connection with a scheme if—

              (a)             any of the requirements of Parts 2 to 7 of this Schedule ceases to be

met; or

              (b)             the scheme organiser fails to provide information requested by the

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Inland Revenue under paragraph 45.

          (3)      If share options granted under an SAYE option scheme before the

withdrawal of approval under this paragraph are exercised after the

withdrawal, the scheme is to be treated for the purposes of—

              (a)             section 519 (exemption in respect of exercise of share option), and

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              (b)             section 520 (exemption in respect of post-acquisition benefits),

           in their application to such options, as if it were still approved at the time of

the exercise.

Approval ineffective after unapproved alteration

  43      (1)      If—

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            (a)            an alteration is made in a SAYE option scheme that has been

approved, and

            (b)            the alteration has not been approved by the Inland Revenue,

                   the approval of the scheme is ineffective after the date of the alteration.

          (2)      Where the Inland Revenue—

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              (a)             have been requested to approve any alteration in such a scheme, and

              (b)             have decided whether or not to approve the alteration,

                   they must give notice of their decision to the scheme organiser.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 9 — Supplementary provisions

    419

 

Appeal against withdrawal of approval etc

  44      (1)      This paragraph applies if an SAYE option scheme has been approved by the

Inland Revenue and they—

              (a)             decide to withdraw approval of the scheme under paragraph 42, or

              (b)             decide not to approve an alteration in the scheme under paragraph

5

43.

          (2)      The scheme organiser may appeal against the decision to the Special

Commissioners.

          (3)      The notice of appeal must be given to the Inland Revenue within 30 days

after the date on which notice of their decision was given to the scheme

10

organiser.

Part 9

Supplementary provisions

Power to require information

  45      (1)      The Inland Revenue may by notice require any person to provide them with

15

any information—

              (a)             which they reasonably require for the performance of their functions

under the SAYE code, and

              (b)             which the person to whom the notice is addressed has or can

reasonably obtain.

20

          (2)      The power conferred by this paragraph extends, in particular, to—

              (a)             information to enable the Inland Revenue—

                    (i)                   to decide whether to approve an SAYE option scheme or to

withdraw an approval already given, or

                    (ii)                  to determine the liability to tax, including capital gains tax, of

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any person who has participated in a scheme, and

              (b)             information about the administration of a scheme and any alteration

of the terms of a scheme.

          (3)      The notice must require the information to be provided within a specified

time, which must not end earlier than 3 months after the date when the

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notice is given.

Jointly owned companies

  46      (1)      This paragraph applies for the purposes of the provisions of the SAYE code

relating to group schemes.

          (2)      Each joint owner of a jointly owned company is to be treated as controlling

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every company within sub-paragraph (3).

          (3)      The companies within this sub-paragraph are—

              (a)             the jointly owned company, and

              (b)             any company controlled by that company.

          (4)      However, no company within sub-paragraph (3) may be—

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              (a)             a constituent company in more than one group scheme, or

 

 

 
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