Textual Amendments
F1Word in Sch. 2 title omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 14, 89 (with Sch. 8 paras. 90-96)
62(1)A SIP may provide that, where the company so directs, the trustees must apply [F2some or all of the] cash dividends in respect of plan shares held on behalf of—U.K.
(a)all participants, or
(b)all participants who elect to reinvest their dividends,
in acquiring further shares on their behalf.
[F3(1A)The company's direction must set out—
(a)the amount of the cash dividends to be applied as mentioned in sub-paragraph (1), or
(b)how that amount is to be determined.]
(2)Sub-paragraph (1) is subject to paragraph 63 (requirements to be met as regards cash dividends).
(3)In the SIP code—
(a)the application of cash dividends as mentioned in sub-paragraph (1) is referred to as “reinvestment”; and
(b)the further plan shares acquired are referred to as “”.
(4)The company may [F4modify or] revoke a direction requiring the reinvestment of cash dividends.
(5)References in the SIP code to the trustees acquiring dividend shares on behalf of a participant include their appropriating to a participant shares already held by them.
Textual Amendments
F2Words in Sch. 2 para. 62(1) substituted (with effect in accordance with Sch. 2 para. 86 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 83(2)
F3Sch. 2 para. 62(1A) inserted (with effect in accordance with Sch. 2 para. 86 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 83(3)
F4Words in Sch. 2 para. 62(4) inserted (with effect in accordance with Sch. 2 para. 86 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 83(4)
63(1)If a SIP makes the provision authorised by paragraph 62(1) (reinvestment of cash dividends), the following paragraphs apply—U.K.
F5...
paragraph 65 (general requirements as to dividend shares),
paragraph 66 (acquisition of dividend shares),
paragraph 67 (holding period for dividend shares), and
paragraph 68 (reinvestment: amounts to be carried forward).
(2)The plan must meet any plan requirements contained in those paragraphs.
(3)A SIP must in any event meet the plan requirement contained in paragraph 69 (cash dividends not required to be reinvested).
Textual Amendments
F5Words in Sch. 2 para. 63(1) omitted (with effect in accordance with Sch. 2 para. 89 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 87
F664U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F6Sch. 2 para. 64 omitted (with effect in accordance with Sch. 2 para. 89 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 88
65[F7(1)] The plan must provide that dividend shares are to be shares— U.K.
(a)which are in the same company and of the same class, and carry 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.
[F8(2)Dividend shares may (notwithstanding sub-paragraph (1)(b) if relevant) be subject to provision requiring dividend shares acquired on behalf of an employee to be offered for sale but only if the requirement of sub-paragraph (3) is met.
(3)The consideration at which the shares are required to be offered for sale must be at least equal to—
(a)the amount of the cash dividends applied in acquiring the shares on behalf of the employee, or
(b)if lower, the market value of the shares at the time they are offered for sale.]
Textual Amendments
F7Sch. 2 para. 65 renumbered as Sch. 2 para. 65(1) (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 26(2), 89 (with Sch. 8 paras. 90-96)
F8Sch. 2 para. 65(2)(3) inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 26(3), 89 (with Sch. 8 paras. 90-96)
66(1)The plan must provide that the trustees must treat participants fairly and equally in exercising their powers in relation to the acquisition of dividend shares.U.K.
(2)The plan must provide for the trustees to acquire dividend shares on behalf of participants on the acquisition date.
(3)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.
(4)In this paragraph “the acquisition date” means the date set by the trustees for the acquisition of dividend shares and falling not later than 30 days after the dividend is received by them.
67U.K.Paragraphs 36 and 37 (the holding period and related matters) apply in relation to dividend shares as they apply in relation to free shares, except that the holding period must be 3 years.
68[F9(1)This paragraph applies where an amount is not reinvested because it is not sufficient to acquire a share.]U.K.
(2)The amount may be retained by the trustees and carried forward to be added to the amount of the next cash dividend to be reinvested.
(3)If so retained, the trustees must hold the amount so as to be separately identifiable for the purposes of sub-paragraphs (4) and (5).
(4)An amount retained under this paragraph must be paid over to the participant—
F10(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)if F11... the participant ceases to be in relevant employment (see paragraph 95), or
(c)if F11... a plan termination notice is issued in respect of the plan (see paragraph 90).
(5)An amount required to be paid over to the participant under sub-paragraph (4) must be paid over as soon as practicable.
F12(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F9Sch. 2 para. 68(1) substituted (with effect in accordance with Sch. 2 para. 86 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 84
F10Sch. 2 para. 68(4)(a) and word omitted (with effect in accordance with Sch. 2 para. 90(4)(5) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 90(2)(a)
F11Words in Sch. 2 para. 68(4)(b)(c) omitted (with effect in accordance with Sch. 2 para. 90(4)(5) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 90(2)(b)
F12Sch. 2 para. 68(6) omitted (with effect in accordance with Sch. 2 para. 90(4)(5) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 90(3)
69(1)The plan must require any distributable cash dividends in respect of plan shares held on behalf of a participant to be paid over to the participant as soon as practicable.U.K.
(2)“Distributable cash dividends” means cash dividends [F13so far as they] are not required to be reinvested under the plan.
Textual Amendments
F13Words in Sch. 2 para. 69(2) substituted (with effect in accordance with Sch. 2 para. 86 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 85