(3) treated as increased by the number of unissued shares referred to in sub-
(4) The references in sub-paragraphs (2) and (3) to the shares to be attributed to
an individual are to the shares which—
(a) for the purposes of paragraph 12(2) (material interest in share
(b) in accordance with paragraph 11(2) (material interest can consist of
or include that of individual’s associates),
fall to be brought into account in the individual’s case so that it can be
determined whether their number exceeds 25% of the company’s ordinary
(5) In applying paragraph 12 the following are to be disregarded—
(a) the interest of the trustees of any approved SIP (within the meaning
of the SIP code: see section 488(4)) in any shares which are held by
them in accordance with the plan but which have not been
appropriated to, or acquired on behalf of, an individual, and
(b) any rights exercisable by the trustees as a result of that interest.
Meaning of “associate”
14 (1) In paragraph 11(2) (the “no material interest” requirement) “associate”, in
relation to an individual, means—
(a) any relative or partner of that individual,
(b) the trustee or trustees of any settlement in relation to which that
individual, or any of the individual’s relatives (living or dead), is or
was a settlor, or
(c) where that individual is interested in any shares or obligations of the
company mentioned in paragraph 11(2) which are subject to any
trust or are part of the estate of a deceased person—
(i) the trustee or trustees of the settlement concerned, or
(ii) the personal representatives of the deceased,
as the case may be.
(2) Sub-paragraph (1)(c) needs to be read with paragraphs 15 and 16 (which
relate to employee benefit trusts and discretionary trusts).
(3) In this paragraph—
(b) parent, child or remoter relation in the direct line, or
(c) brother or sister;
“settlor” and “settlement” have the same meaning as in Chapter 1A of
Part 15 of ICTA (see section 660G(1) and (2)).
Meaning of “associate”: trustees of employee benefit trust
15 (1) This paragraph applies for the purposes of paragraph 14(1)(c) (meaning of
“associate”: trustees of settlement) where the individual is interested as a
beneficiary of an employee benefit trust in shares or obligations of the
company mentioned in paragraph 11(2).
(2) The trustees of the employee benefit trust are not to be regarded as associates
of the individual as a result only of the individual’s being so interested if
(a) the individual, nor
(b) the individual together with one or more of the individual’s
(c) any such associate, with or without any other such associates,
has at any time after 13th March 1989 been the beneficial owner of, or been
able (directly or through the medium of other companies or by any other
indirect means) to control, more than 25% of the ordinary share capital of the
(3) In sub-paragraph (2)(b) and (c) “associate” has the meaning given by
paragraph 14(1), but does not include the trustees of an employee benefit
trust as a result only of the individual’s having an interest in shares or
obligations of the trust.
(4) Chapter 11 of Part 7 of this Act (which deals with the attribution of interests
in companies to beneficiaries of employee benefit trusts) applies for the
purposes of sub-paragraph (2).
(5) In this paragraph “employee benefit trust” has the same meaning as in that
Chapter (see sections 550 and 551).
Meaning of “associate”: trustees of discretionary trust
16 (1) This paragraph applies for the purposes of paragraph 14(1)(c) (meaning of
“associate”: trustees of settlement) where—
(a) the individual (“the beneficiary”) is one of the objects of a
(b) the property subject to the trust has at any time consisted of, or
included, shares or obligations of the company mentioned in
(c) the beneficiary has ceased to be eligible to benefit under the trust as
a result of—
(i) an irrevocable disclaimer or release executed by the
(ii) the irrevocable exercise by the trustees of a power to exclude
the beneficiary from the objects of the trust,
(d) immediately after the beneficiary ceased to be so eligible, no
associate of the beneficiary was interested in the shares or
obligations of the company that were subject to the trust, and
(e) during the period of 12 months ending with the date on which the
beneficiary ceased to be so eligible, neither the beneficiary nor any
associate of the beneficiary received any benefit under the trust.
(2) The beneficiary is not, as a result only of the matters referred to in sub-
paragraph (1)(a) and (b), to be regarded as having been interested in the
shares or obligations of the company at any time during that period of 12
(3) In sub-paragraph (1) “associate” has the meaning given by paragraph 14(1)
but with the omission of paragraph (c).
Shares to which schemes can apply
Requirements relating to shares that may be subject to share options: introduction
17 (1) An SAYE option scheme must meet the requirements of—
paragraph 18 (shares must be ordinary shares of certain companies),
paragraph 19 (requirements as to listing),
paragraph 20 (shares must be fully paid up and not redeemable),
paragraph 21 (only certain kinds of restrictions allowed), and
paragraph 22 (requirements as to other shareholdings).
(2) In this Part “eligible shares” means shares which may be acquired by the
exercise of share options under the scheme.
Shares must be ordinary shares of certain companies
18 Eligible shares must form part of the ordinary share capital of—
(a) the scheme organiser,
(b) a company which has control of the scheme organiser, or
(c) a company which either 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.
Requirements as to listing
19 (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
(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
Shares must be fully paid up and not redeemable
20 Eligible shares must be—
(a) fully paid up, and
(b) not redeemable.
Only certain kinds of restriction allowed
21 (1) Eligible shares must not be subject to any restrictions (see sub-paragraph (4))
(a) those attaching to all shares of the same class, or
(b) those permitted by sub-paragraph (2).
(2) If the conditions of sub-paragraph (3) are met, eligible shares may be subject
to a restriction imposed by the company’s articles of association—
(a) requiring all shares held by directors or employees—
(i) of the company, or
(ii) of any other company of which it has control,
to be disposed of, or offered for sale, on ceasing to be so held, and
(b) requiring all shares acquired, as a result of rights or interests
obtained by such directors or employees, by persons who—
(i) are not such directors or employees, or
(ii) have ceased to be such directors or employees,
to be disposed of, or offered for sale, when they are acquired.
(3) The conditions of this sub-paragraph are—
(a) that a disposal required by the restriction will be by way of sale for a
consideration in money on terms specified in the articles of
(b) that under general conditions contained in the articles of association
anyone disposing of shares of the same class (whether or not held or
acquired as mentioned in sub-paragraph (2)) may be required to sell
them on terms which are the same as those mentioned in paragraph
(4) For the purposes of this paragraph shares are subject to a restriction if there
is any contract, agreement, arrangement or condition—
(a) by which a person’s freedom to dispose of the shares or of any
interest in them or of the proceeds of their sale, or to exercise any
right conferred by them, is restricted, or
(b) by which such a disposal or exercise may result in any disadvantage
to the person or to a person connected with the person.
This is subject to sub-paragraphs (5) and (6).
(5) Sub-paragraph (4) does not extend to so much of any contract, agreement,
arrangement or condition as contains provisions similar in purpose and
effect to any of the provisions of the Model Code as (for the time being) set
out in the listing rules issued by the competent authority for listing in the
United Kingdom under section 74(4) of the Financial Services and Markets
Act 2000 (c. 8).
(6) Any discretion of the directors under the articles of association of the
company to refuse to accept the transfer of shares is to be disregarded for the
purposes of this paragraph if the directors—
(a) have undertaken to the Inland Revenue not to exercise it in such a
way as to discriminate against persons participating in the scheme;
(b) have notified all those who are eligible to do so of the existence of the
(7) In this paragraph “articles of association” includes, in the case of a company
incorporated under the law of a country outside the United Kingdom, any
equivalent document relating to the company.
Requirements as to other shareholdings
22 (1) The majority of the issued shares of the same class as the eligible shares must
(a) employee-control shares, or
(b) open market shares,
unless the eligible shares are shares in a company whose ordinary share
capital consists of shares of one class only.
(2) Shares in a company are “employee-control shares” if—
(a) the persons holding the shares are, by virtue of their holding,
together able to control the company, and
(b) those persons are or have been employees or directors of the
company or of another company which is under the control of the
(3) Shares in a company are “open market shares” if the persons holding the
shares are not—
(a) persons who acquired their shares as a result of a right conferred on
them or an opportunity afforded to them as a director or employee
of the scheme organiser or any other company, and not as a result of
an offer to the public, or
(b) trustees holding shares on behalf of persons who acquired their
beneficial interests in the shares as mentioned in paragraph (a), or
(c) in the case of shares which—
(i) are not of a class listed on a recognised stock exchange, and
(ii) are in a company which is under the control of a listed
company (as defined by paragraph 19(2)),
companies which have control of the company whose shares are in
question or of which that company is an associated company.
Requirement for linked savings scheme
Requirements as to linked savings scheme: introduction
23 An SAYE option scheme must meet the requirements of—
paragraph 24 (payments for shares to be linked to approved savings
paragraph 25 (requirements as to contributions to savings schemes).
Payments for shares to be linked to approved savings schemes
24 (1) The scheme must provide for shares acquired by the exercise of share
options granted under the scheme to be paid for with money not exceeding
the amount of repayments made and any interest paid under a CCS scheme
which has been approved by the Inland Revenue for the purposes of this
Schedule (“the CCS scheme”).
(2) In the SAYE code “CCS scheme” means certified contractual savings
Requirements as to contributions to savings schemes
25 (1) The scheme must provide for a person’s contributions under the CCS
scheme to be of an amount that will secure, as nearly as possible, repayment
of an amount equal to the option price.
(2) The “option price” means the amount payable, on exercising share options
granted under the scheme, in order to acquire the maximum number of
shares that may be acquired under them (see paragraph 28).
(3) The scheme must neither—
(a) permit the aggregate amount of a person’s contributions under CCS
schemes linked to approved SAYE schemes to exceed £250 per
(b) impose a minimum on the amount of a person’s contributions which
exceeds £10 per month.
(4) The Treasury may by order amend sub-paragraph (3) by substituting for any
amount for the time being specified there an amount specified in the order.
Repayments under a savings scheme: whether bonuses included
26 (1) For the purposes of this Schedule repayments under a CCS scheme may be
taken as including, or as not including, a bonus.
(2) The bonus may either be the maximum bonus under that scheme or a lesser
(3) An SAYE option scheme must require the question whether repayments are
to be taken as including bonuses to be determined at the time when share
options are granted.
Requirements etc. relating to share options
Requirements etc. relating to share options: introduction
27 (1) An SAYE option scheme must meet the requirements of—
paragraph 28 (requirements as to price for acquisition of shares),
paragraph 29 (share options must not be transferable),
paragraph 30 (time for exercising options: general),
paragraph 31 (requirement to have a “specified age”),
paragraph 32 (exercise of options: death),
paragraph 33 (exercise of options: reaching specified age without
paragraph 34 (exercise of options: scheme-related employment ends).
(2) An SAYE option scheme may make any provision authorised by—
paragraph 36 (exercise of options: employment in associated company
at bonus date), and
paragraph 37 (exercise of options: company events).
Requirements as to price for acquisition of shares
28 (1) The price at which shares may be acquired by the exercise of a share option
granted under the scheme—
(a) must be stated at the time when the option is granted, and
(b) must not be manifestly less than 80% of the market value of shares of
the same class at that time.
This is subject to sub-paragraphs (2) and (3).
(2) The Inland Revenue and the scheme organiser may agree in writing that
sub-paragraph (1)(b) is to apply as if the reference to the time when the
option is granted were to an earlier time or times stated in the agreement.
(3) The scheme may provide for one or more of the following—
(a) the price at which shares may be acquired by the exercise of a share
option granted under the scheme,
(b) the number of shares which may be so acquired, or
(c) the description of shares which may be so acquired,
to be varied so far as necessary to take account of a variation in the share
capital of which the shares form part.
(4) But the scheme must provide that no such variation is to be made without
the prior approval of the Inland Revenue.
Share options must not be transferable
29 (1) The scheme must ensure that share options granted to a participant are not
capable of being transferred by the participant.
(2) Paragraph 32 provides for the exercise of the options where the participant
Time for exercising options: general
30 (1) The scheme must ensure that share options granted under it must not be
capable of being exercised—
(a) before the bonus date, or
(b) later than 6 months after that date.
(2) However, in sub-paragraph (1)—
(a) paragraph (a) is subject to paragraphs 32 to 34 and 37 (exercise of
options in the event of death, reaching the specified age without
retiring, scheme-related employment ending or certain events
occurring in relation to the company); and
(b) paragraph (b) is subject to paragraph 32.
(3) In the SAYE code “the bonus date” means the date on which repayments
under the CCS scheme are due.
(4) For this purpose repayments are to be regarded as due as follows—
(a) if the repayments are to be taken as including the maximum bonus
(see paragraph 26(2)), on the earliest date on which that bonus is
(b) in any other case, on the earliest date on which a bonus is payable.
Requirement to have a “specified age”
31 (1) The scheme must specify the age that is to be the specified age for the
purposes of the scheme (see paragraphs 33(1)and 34(2)).
(2) The age specified must be—
(a) the same for men and women,
(b) not less than 60, and
(c) not more than 75.