SCHEDULES

SCHEDULE 8

Part VII Reinvestment of cash dividends

Reinvestment

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(1)

The plan may provide that where the company so directs—

(a)

all cash dividends in respect of plan shares held on behalf of participants must be applied in acquiring further shares on their behalf, or

(b)

all cash dividends in respect of plan shares held on behalf of participants who elect to reinvest their dividends must be applied in acquiring further shares on their behalf.

This is referred to in this Part of this Schedule as “reinvestment" and the further plan shares acquired are referred to in this Schedule as “dividend shares".

(2)

The company may revoke a direction.

(3)

Where cash dividends in respect of plan shares held on behalf of a participant are not required to be reinvested under the plan, the plan must require the dividends to be paid over to the participant as soon as practicable.

(4)

This paragraph is subject to paragraph 54 (limit on amount reinvested).

Limit on amount reinvested

54

(1)

The plan must provide that the total dividend reinvestment in respect of any participant cannot exceed £1,500 in any tax year.

(2)

For this purpose “the total dividend reinvestment" in respect of a participant is the sum of—

(a)

the amount applied by the trustees in acquiring dividend shares on behalf of the participant under the plan, and

(b)

the amount applied by the trustees of other employee share ownership plans that are—

(i)

established by the company or an associated company, and

(ii)

approved under this Schedule,

in acquiring dividend shares on his behalf.

(3)

If the amounts received by the trustees exceed the limit in sub-paragraph (1), the plan must provide for the balance to be paid over to the participant as soon as practicable.

General requirements for dividend shares

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The plan must provide that dividend shares are shares—

(a)

of the same class and carrying the same rights as the shares in respect of which the dividend is paid, and

(b)

which are not subject to any provision for forfeiture.

Acquisition of dividend shares

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(1)

The plan must provide that in exercising their powers in relation to the acquisition of dividend shares the trustees must treat participants fairly and equally.

(2)

The plan must provide for the trustees to apply a cash dividend in acquiring further shares on behalf of participants on the acquisition date.

This does not affect the carrying forward under paragraph 58 of any such amount as is mentioned in sub-paragraph (1) of that paragraph (amounts remaining after acquisition of shares).

(3)

For this purpose “the acquisition date” means the date set by the trustees in relation to the acquisition of dividend shares, being a date within 30 days after the dividend is received by them.

(4)

The number of dividend shares acquired on behalf of each participant must be determined in accordance with the market value of the shares on the acquisition date.

(5)

References in this Part of this Schedule to the trustees acquiring dividend shares on behalf of a participant include their appropriating to a participant shares already held by them.

Holding period for dividend shares

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The provisions of paragraphs 31 and 32 (holding period and related matters) apply in relation to dividend shares as they apply to free shares, except that the holding period must be three years.

Certain amounts not reinvested to be carried forward

58

(1)

Any amount that is not reinvested—

(a)

because the amount of the cash dividend to which the participant is entitled is not sufficient to acquire a share, or

(b)

because there is an amount remaining after acquiring one or more dividend shares on the participant’s behalf,

may be retained by the trustees and carried forward to be added to the amount of the next cash dividend to be reinvested, but shall be held by them so as to be separately identifiable for the purposes of sub-paragraphs (2) and (3).

(2)

An amount retained under this paragraph shall be paid over to the participant—

(a)

if or to the extent that it is not reinvested within the period of three years beginning with the date on which the dividend was paid, or

(b)

if during that period the participant ceases to be in relevant employment, or

(c)

if during that period a plan termination notice is issued in respect of the plan.

(3)

An amount required to be paid over to the participant under sub-paragraph (2) shall be paid over as soon as practicable.

(4)

For the purposes of this paragraph an amount carried forward under this paragraph derived from an earlier cash dividend is treated as reinvested before an amount derived from a later cash dividend.