Income Tax (Earnings and Pensions) Act 2003

27 (1) This paragraph applies to a scheme that makes provision under paragraph 26 (exchange of options on company reorganisation). U.K.

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

(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 16 (shares must be ordinary shares of certain companies), namely—

(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 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 paragraphs 16 to [F1 18] (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 immediately before the release of those options by the participant must [F2 be substantially the same as] 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 shares under the new options must be [F3 substantially the same as] the total amount that would have been so payable under the old options.

(5) For the purposes of the CSOP code, new share options granted under the terms of a provision included in a scheme under paragraph 26 are to be treated as having been granted at the time when the corresponding old 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).

[F4 (7) For the purposes of this paragraph the market value of shares subject to a restriction is to be determined as if they were not subject to the restriction.]

[F5 (8) For the purposes of this paragraph the market value of any shares is to be determined using a methodology agreed by Her Majesty's Revenue and Customs.]

Textual Amendments

F1 Word in Sch. 4 para. 27(4)(a) substituted (with effect in accordance with s. 16(8) of the amending Act) by Finance (No. 2) Act 2023 (c. 30), s. 16(5) (with s. 16(9)(10))

F2 Words in Sch. 4 para. 27(4)(c) substituted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 178(2)(a), 204 (with Sch. 8 paras. 205-215)

F3 Words in Sch. 4 para. 27(4)(d) substituted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 178(2)(b), 204 (with Sch. 8 paras. 205-215)

F4 Sch. 4 para. 27(7) inserted (with effect in accordance with Sch. 2 para. 77 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 73

F5 Sch. 4 para. 27(8) inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 178(3), 204 (with Sch. 8 paras. 205-215)

Modifications etc. (not altering text)

C1 Sch. 4 para. 27(5) excluded (24.9.2010 with effect in accordance with s. 39(3)-(9) of the amending Act) by Finance Act 2010 (c. 13), s. 39(8)