SCHEDULES

SCHEDULE 2... share incentive plans

Part 4Types of shares that may be awarded

Types of share that may be awarded: introduction

25

(1)

The requirements of the following paragraphs must be met with respect to any shares that may be awarded under a SIP—

  • paragraph 26 (shares must be part of ordinary share capital of certain companies),

  • paragraph 27 (requirement as to listing etc.),

  • paragraph 28 (shares must be fully paid up and not redeemable), F1and

  • paragraph 29 (prohibited shares)

  • F2...

(2)

In this Part of this Schedule “eligible shares” means shares that may be awarded under the plan.

Shares must be part of ordinary share capital of certain companies

26

Eligible shares must form part of the ordinary share capital of—

(a)

the company,

(b)

a company which has control of the company, or

(c)

a company which either is, or has control of, a company which is a member of a consortium owning either the company or a company having control of the company.

Requirement as to listing etc.

27

(1)

Eligible shares must be—

(a)

shares of a class listed on a recognised stock exchange,

(b)

shares in a company which is not under the control of another company, F3...

F4(ba)

shares in a company which is subject to an employee-ownership trust, or

(c)

shares in a company which is under the control of a listed company.

(2)

A “listed company” is a company whose shares are listed on a recognised stock exchange, other than—

(a)

a close company, or

(b)

a company that would be a close company if resident in the United Kingdom.

F5(3)

But a company is not a close company for the purposes of sub-paragraph (2) if it is subject to an employee-ownership trust.

(4)

A company (“C”) is “subject to an employee-ownership trust” if—

(a)

C meets the trading requirement set out in section 312D,

(b)

C meets the indirect employee-ownership requirement,

(c)

neither C, nor any other company which is a member of the same group of companies as C, is a service company, and

(d)

C is not under the control of another company (ignoring for this purpose another company acting in its capacity as the trustee of the settlement by virtue of which C meets the indirect employee-ownership requirement).

(5)

Section 312E (the indirect employee-ownership requirement) applies for the purposes of sub-paragraph (4), subject to the following modifications—

(a)

subsection (3) of that section has effect as if—

(i)

the words “during the qualifying period” were omitted, and

(ii)

in paragraph (a) for “10 December 2013” there were substituted “ 1 October 2014 ”, and

(b)

subsection (4) has effect as if for paragraph (b) there were substituted—

“(b)

section 236L of that Act applies as if the reference in subsection (1)(c) of that section to the period of 12 months ending with the time in question were a reference to any time on or after 1 October 2014.”

(6)

Section 312G (meaning of “service company”) applies for the purposes of sub-paragraph (4)(c), subject to the following modifications—

(a)

in subsection (3)(b), the reference to the company which makes the payment is to be read as a reference to C,

(b)

in subsection (4)(a), the reference to the time the payment is made is to be read as a reference to any time, and

(c)

in subsection (4)(b), the reference to any time before the time the payment is made is to be read as a reference to any time.

Shares must be fully paid up and not redeemable

28

(1)

Eligible shares must be—

(a)

fully paid up, and

(b)

not redeemable.

(2)

For the purposes of sub-paragraph (1)(a) shares are not to be regarded as fully paid up if there is an undertaking to pay cash at a future date to the company whose shares they are.

(3)

For the purposes of sub-paragraph (1)(b) “redeemable” shares include shares that may become redeemable at a future date.

(4)

Sub-paragraph (1)(b) does not apply to shares in F6a registered co-operative society.

F7(5)

In sub-paragraph (4) “registered co-operative society” means—

(a)

a society registered as a co-operative society under the Co-operative and Community Benefit Societies Act 2014,

(b)

a pre-commencement society (within the meaning of that Act) that is a co-operative society within the meaning of section 2 of that Act,

(c)

a society registered or deemed to be registered under the Industrial and Provident Societies Act (Northern Ireland) 1969 that is a co-operative society within the meaning of section 1 of that Act , or

(d)

an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society.

Prohibited shares

29

(1)

Eligible shares must not be shares in—

(a)

a service company, or

(b)

a company that—

(i)

has control of a service company, and

(ii)

is under the control of a person or persons who fall within sub-paragraph (2)(b)(i) or (ii) as it applies to a service company.

(2)

For the purposes of this paragraph a company is a “service company” if—

(a)

the business carried on by it consists substantially in the provision of the services of persons employed by it, and

(b)

the majority of those services are provided to—

(i)

a person who has control of the company,

(ii)

two or more persons who together have control of the company, or

(iii)

a company associated with the company.

(3)

For the purposes of sub-paragraph (2)(b)(iii) a company is associated with another company if both companies are under the control of the same person or persons.

(4)

For the purposes of sub-paragraphs (1) to (3)—

(a)

a partnership is to be treated as a single person; and

(b)

where a partner (alone or together with others) has control of a company, the partnership is to be treated as having (in the same way) control of that company.

(5)

For the purposes of this paragraph the question whether a person controls a company is to be determined in accordance with F8sections 450 and 451 of CTA 2010.

Only certain kinds of restriction allowed

F930

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Permitted restrictions: voting rights

F931

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Permitted restrictions: provision for forfeiture

F932

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Permitted restrictions: pre-emption conditions

F933

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