6The plan must meet the requirements of—
paragraph 7 (the purpose of plan);
paragraph 8 (all-employee nature of plan);
paragraph 9 (participation on same terms);
paragraph 10 (no preferential treatment for directors, etc.);
paragraph 11 (no further conditions);
paragraph 12 (no loan arrangements).
7(1)The purpose of the plan must be to provide benefits to employees in the nature of shares in a company which give them a continuing stake in that company.
(2)The plan must not contain, and the operation of the plan must not involve, features which are neither essential nor reasonably incidental to that purpose.
8(1)The plan must provide that every employee who—
(a)meets the requirements mentioned in Part III (eligibility of individuals) in relation to an award of shares under the plan, and
(b)is chargeable to tax under Case I of Schedule E in respect of the employment by reference to which he satisfies the condition in paragraph 14 (the employment requirement),
is eligible to participate in the award, and invited to do so.
(2)The plan must not contain any feature which has or would have the effect of discouraging any description of employees within sub-paragraph (1) from participating in an award of shares under the plan.
This does not apply to any provision required or authorised by this Schedule.
(3)The plan may provide that an employee who—
(a)meets the requirements mentioned in Part III (eligibility of individuals) in relation to an award of shares under the plan, but
(b)is not chargeable to tax as mentioned in sub-paragraph (1)(b),
is eligible to participate in the award, and may be invited to do so.
(4)For the purposes of this Schedule an individual is a “qualifying employee”, in relation to an award of shares, if—
(a)he is eligible to participate in the award, and
(b)either—
(i)he must be invited to participate in the award (see sub-paragraph (1)), or
(ii)under the plan he may be invited to participate in the award (see sub-paragraph (3)) and has been so invited.
9(1)The requirement of this paragraph is—
(a)that every employee who is invited to participate in an award must be invited to participate on the same terms, and
(b)that those who do participate must actually do so on the same terms.
(2)The requirement of this paragraph is infringed by the awarding of free shares by reference to factors other than those mentioned in sub-paragraph (3).
(3)The requirement of this paragraph is not infringed by the awarding of free shares by reference to an employee’s—
(a)remuneration,
(b)length of service, or
(c)hours worked.
This is subject to sub-paragraph (4).
(4)Where the awarding of free shares is by reference to more than one of the factors mentioned in sub-paragraph (3) the requirement of this paragraph is infringed unless—
(a)each factor gives rise to a separate entitlement related to the level of remuneration, length of service or (as the case may be) hours worked, and
(b)the total entitlement is the sum of those separate entitlements.
(5)In the case of an award of free shares which provides for performance allowances, this paragraph has effect as provided in paragraph 29 (performance allowances: method one) or, as the case may be, paragraph 30 (performance allowances: method two).
For this purpose “performance allowance” has the meaning given in paragraph 25(1).
10(1)The first requirement of this paragraph is that no feature of the plan must have or be likely to have the effect of conferring benefits wholly or mainly—
(a)on directors, or
(b)on employees receiving higher levels of remuneration.
(2)The second requirement of this paragraph is that in the case of a plan established by a company that is a member of a group, the identity of the company (or, if it is a group plan, the participating companies) must not be such that the plan has or is likely to have the effect of conferring benefits wholly or mainly—
(a)on employees of companies that are members of the group who receive higher levels of remuneration, or
(b)on directors of such companies.
(3)This paragraph is subject to paragraph 9(3) (award of shares by reference to remuneration etc.).
11No conditions, other than those required or permitted by this Schedule, may be imposed on an employee’s participation in an award of shares under the plan.
12(1)The arrangements for the plan must not make any provision, or be in any way associated with any provision made, for loans to some or all of the employees of—
(a)the company, or
(b)in the case of a group plan, any participating company,
and the operation of the plan must not be in any way associated with such loans.
(2)For the purposes of sub-paragraph (1) “arrangements” includes any scheme, agreement, undertaking or understanding, whether or not legally enforceable.