Addleshaw Goddard
32 Experts
3 Contributions by Addleshaw Goddard
PRACTICE NOTES
This Practice Note aims to outline the principal distinctions between Scots law and English law concerning the creation of fixed security over land and buildings. These differences extend from the forms of security that can be taken over real property, to the ways in which such security is perfected and the significance of those perfection requirements. For broader guidance on taking security over land and, in particular, the position in England and Wales, see Practice Note: Taking security over land.
Land and buildings
A helpful place to begin is by considering what is meant by land and buildings for the purposes of fixed security. Under Scots law, a standard security can be taken as fixed security over property owned outright (heritable property) or property held under a lease. For leasehold property, a lease for a term of 20 years or less cannot be
Banking & Finance
PRACTICE NOTES
What is smart metering?
For an introduction to smart meters, see also Practice Note: What is a smart meter? In Great Britain, licensed electricity and gas suppliers are required under their supply licences to take all reasonable steps to roll out smart meters to domestic and small business customers. The programme is expected to lower customers’ energy bills, boost energy efficiency, and make it simpler to switch energy supplier. The UK government views smart metering as a crucial instrument for a low‑carbon economy, reaching net zero emissions by 2050, and realising ambitions for an affordable, secure and sustainable energy supply chain.
The smart meter roll‑out has been extended on several occasions since the Electricity Act 1989 and Gas Act 1986 were amended to place duties on licensed suppliers to complete it. There have also been multiple reviews and publications on progress, including National Audit Office
Energy
PRACTICE NOTES
Requirement to transfer offshore transmission assets
For further practical guidance on key legal issues in the wind sector, see also the following resources:
Wind: Projects and Transactions
Collinson and Hockman on Energy Law: Regulating, Consenting and Incentivising the Energy Transition (for detailed commentary on the regulation, consenting and incentivisation of the net zero energy transition under the laws of England and Wales)
That textbook offers in-depth analysis of matters discussed in this Practice Note.
Why are generators required to transfer offshore transmission assets?
An offshore wind farm depends on its link to the onshore electricity grid via offshore electricity transmission assets. Under the regime for projects in Britain’s territorial waters, generators may choose for a separate offshore transmission owner (OFTO) to build these transmission assets; nevertheless, to date, UK offshore wind generators have undertaken the construction themselves (commonly termed Generator Build). However,
Energy
51 Contributions by Addleshaw Goddard Experts
PRACTICE NOTES
What does this Practice Note cover?
This Practice Note explains what a sustainability-linked bond (SLB) is, outlines the Sustainability-linked Bond Principles (SLBPs) issued by the International Capital Market Association (ICMA), and how they operate. It also explores the outlook for SLBs. For the latest updates and major developments in sustainable finance (including SLBs), see Practice Notes: Sustainable finance—recent news and Sustainable finance and ESG—timeline. For an introductory overview of sustainable finance, see Practice Note: Introductory guide to sustainable finance and ESG for finance lawyers.
What are sustainability-linked bonds?
SLBs are bonds where the proceeds are not earmarked for green or sustainable projects (unlike ‘use of proceeds’ green or sustainability bonds) and are intended for general corporate purposes. Instead, SLBs are tied to performance against specified key performance indicators (the KPIs) aimed at meeting pre-defined sustainability performance targets (SPTs). Depending on whether those targets are met, certain bond terms may
Banking & Finance
PRACTICE NOTES
ARCHIVED: This content was published in 2020 and is not maintained.
The Market Standards Trend Report, Ethnicity in Corporate Governance Reporting 2020, reviews the current recommendations and guidelines for public companies concerning ethnic diversity reporting in the UK, concentrating on the way these expectations and requirements have been interpreted, implemented and publicly reported on by FTSE 100 constituents.
The report also assesses recent and upcoming developments anticipated to influence this area, and offers companies expert best practice guidance in advance of the target deadline set by the Parker Review for FTSE 100 companies to have at least one ethnic minority director on the board by the end of 2021.
Topics covered include:
an overview of ethnic diversity targets and reporting requirements for public companies
an examination of the common challenges experienced in relation to definitions, terminology, and
...
Corporate
PRACTICE NOTES
For broader guidance on share incentive plans (SIPs), see Practice Note: What is a SIP? For an overview of save as you earn (SAYE) schemes, see Practice Note: How SAYE schemes work and key features.
Legislation governing SIPs and SAYEs—registration and filing requirements
The statutory requirements for SIPs and SAYE schemes are set out in separate schedules to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003): ITEPA 2003, Sch 2 applies to SIPs and ITEPA 2003, Sch 3 applies to SAYE schemes. In this Practice Note, these are termed ‘Schedule 2’ or ‘Schedule 3’, as appropriate—or ‘the applicable schedule of ITEPA 2003’.
The provisions dealing with registration and filing are found as follows:
for SIPs, in ITEPA 2003, Sch 2 Pt 10, paras 81A–81K, and
for SAYE schemes, in ITEPA 2003, Sch 3 Pt 8, paras 40A–45
The HMRC
Share Incentives
PRACTICE NOTES
ARCHIVED: This content was published in 2021 and is not maintained.
The Market Standards trend report delivers detailed examination of the 42 firm offers, 45 possible offers and 13 formal sale processes and/or strategic reviews announced by Main Market and AIM companies subject to the Takeover Code in 2020. It shares insight on public M&A patterns and what we and our contributors anticipate for 2021 and beyond.
What does the Market Standards trend report cover?
Topics explored include:
transaction value and volume
transaction structures
hostile, rival and mandatory bids
P2P transactions
domestic and international bidder activity
sector focus
post-offer statements of intention (POI statements) and COVID-19
legal and regulatory changes
outlook for 2021
The report also studies high‑profile deals, such as Intact Financial and Tryg’s £7.2bn bid for RSA Insurance Group, GardaWorld’s £3.7bn hostile bid for G4S, Allied
Corporate
PRACTICE NOTES
ARCHIVED: This content was published in 2020 and is not maintained. The Market Standards trend report delivers detailed analysis of the 12 binding offers and ten potential offers made for Main Market and AIM companies subject to the Takeover Code in H1 2020. It also provides insight into public M&A patterns and what we might anticipate in H2 2020 and beyond.
What does the Market Standards trend report cover?
deal value and volume
private equity deal activity
UK and foreign bidder activity
industry focus
deal structures
post-offer statements of intention
shareholder activism
coronavirus (COVID-19) issues and impact
legal and regulatory developments
What are the highlights from the report?
The economic uncertainty arising from the coronavirus (COVID-19) pandemic has had a material effect on public M&A activity, with activity notably lower in Q2 2020. In H1 2020 there were 12 firm offers announced, compared with 33 firm offers in H1 2019 and 33 firm...
Corporate
PRACTICE NOTES
Summary of tax treatment
The tax advantages available under a ‘Schedule 2 share incentive plan (SIP)’ are substantial indeed for both employees and employers. Staff who buy partnership shares through a SIP can avoid income tax and National Insurance contributions (NICs) at their combined marginal rate, and may enjoy tax-free increases in the value of those shares. In addition, free, matching and dividend shares can, in some cases, be obtained and disposed of without any liability to income tax, NICs or capital gains tax (CGT). Employers can reduce employer NICs and the apprenticeship levy, which can amount to a meaningful saving where many employees take part in the SIP. Shares obtained via a SIP must usually be retained for at least five years (dividend shares for three) to secure full income tax and NICs relief, which can itself operate as a strong
Share Incentives
PRACTICE NOTES
Are SIPs always appropriate?
Because a share incentive plan (SIP) can deliver several kinds of award, it can suit a wide range of businesses and circumstances. Certain employers simply wish to allow staff to buy shares through the plan, whereas others aim to recognise performance by allocating free shares to employees. Another approach is to motivate take‑up by offering matching shares tied to the quantity employees acquire, linked to the number of shares purchased by each participant. Consequently, where an organisation is looking to broaden employee share ownership across its workforce, a SIP can be a sensible route, not least in light of possible tax benefits available under the plan. That said, the regime has tight rules and requires ongoing administration, so a SIP will not be the right fit for every business or situation...
Share Incentives
PRACTICE NOTES
SIP
As the sole tax‑favoured share plan, a SIP allows participants to potentially realise unlimited growth in their shares without incurring income tax, National Insurance contributions (NICs) or capital gains tax (CGT). For all other tax‑advantaged arrangements—enterprise management incentives (EMI), save as you earn (SAYE) and company share option plans (CSOPs)—CGT can arise on the increase in share value from the date the options were granted. By contrast, where an individual keeps their SIP shares within the plan until disposal, no CGT is payable on that disposal. Do note that if a disqualifying event occurs in respect of a SIP, the preferential tax treatment for SIPs will not apply to any awards made after that point. For more information, see Practice Note: SIPs—qualifying companies and type of shares—Restrictions on shares and disqualifying events for SIPs. The tax outcomes described in this Practice Note apply to
Share Incentives
PRACTICE NOTES
Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003)
In Schedule 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), the term ‘award of shares’ denotes shares that are either allocated to employees or acquired on their behalf on a particular occasion. Consequently, where a number of employees receive shares at the same time under a common invitation, each employee is regarded as having taken part in the same award of shares. A company that sets up a share incentive plan (SIP) enabling the acquisition of partnership shares has no duty to provide free shares, and the reverse also applies. An SIP may specify a qualifying period of employment, and this requirement must be identical for all participants in the plan. The maximum length of any such qualifying period will vary according to the form of award
Share Incentives
PRACTICE NOTES
The statutory rules for share incentive plans (SIPs) set out strict parameters for the type of trust that must run alongside a SIP and for what trustees may and may not do. Accordingly, when a new SIP is brought in, it will almost always require a fresh trust to be set up at the same time to support it. This Practice Note explains the requirements that govern SIP trusts, together with the duties and limitations placed on the trustees of those trusts.
Requirement for trustees
The trust sits at the heart of a SIP. To operate, a SIP must appoint a trustee body made up of UK‑resident persons. Consequently, every trustee—individual or corporate—has to be UK‑resident. Many listed companies opt for a single professional corporate trustee; alternatively, trustees may comprise a group of at least two individuals or a company subsidiary. Whether a natural person or a
Share Incentives
PRACTICE NOTES
ARCHIVED: This content was published in 2020 and is not maintained.
The Market Standards trend report presents detailed examination of the 66 firm offers and 45 possible offers made for quoted companies governed by the Takeover Code during 2019. It also shares insight into public M&A patterns and what we might expect in 2020 and thereafter.
What does the Market Standards trend report cover?
transaction value and volume
private equity participation
hostile takeovers and rival bids
sector focus
UK and overseas bidder activity
shareholder activism
post-offer undertakings and national security undertakings
legal and regulatory developments
The report assesses headline transactions, including the Takeaway.com/Prosus competing bids for Just Eat, Advent International’s £4bn offer for Cobham, the £2.6bn consortium bid for Inmarsat, and Non-Standard Finance’s £1.3bn hostile approach for Provident Financial.
What are the highlights from the
Corporate
PRACTICE NOTES
Terminology
Under the SIP code—the legislation that governs the terms and requirements of Share Incentive Plans (SIPs) and sets out the available tax reliefs—the expression ‘award of shares’ describes shares that are either allocated to employees or acquired on their behalf on a particular occasion. Accordingly, when multiple employees receive shares at the same time pursuant to the same invitation, each individual is regarded as having taken part in the same award of shares. As dividend shares are not, in strict terms, ‘awarded’, they are excluded from the meaning of an ‘award of shares’ in paragraph 5, Part 1 of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), and therefore the eligibility requirements do not extend to dividend shares.
All-employee nature of the SIP
It is a fundamental principle of a SIP that it is operated on an
Share Incentives
PRACTICE NOTES
The company establishing a SIP
The company setting up a share incentive plan (SIP) does not need to be the same entity whose shares are allocated. However, both:
the shares to be granted, and
the connection between the SIP-establishing entity and the company whose shares are issued
must satisfy the relevant legislative conditions.
A SIP can be created either:
solely for employees of the company that establishes it; or
for those employees and for employees of other companies it controls (a group plan)—see Constituent companies below.
In a group where the parent company’s shares are to be awarded, there are two options:
the parent company may establish the SIP and extend it to the appropriate subsidiaries; or
each subsidiary may establish its own SIP, provided the other statutory requirements concerning the shares under award are met—see
Share Incentives
PRACTICE NOTES
Companies in the US and the UK have long allowed their workforces to hold equity stakes, and each country has offered tax reliefs and introduced other policies and mechanisms to foster employee share ownership across organisations. While the schemes used in the US and UK have evolved along different paths, they still share numerous similarities. Despite differing development over time, many core aspects remain aligned between the two jurisdictions. Accordingly, comparisons should be drawn with those common elements in mind carefully.
This Practice Note compares the UK and US across:
tax-advantaged, all-employee arrangements
discretionary share schemes, and
non tax-advantaged share schemes
The tables that follow are merely summaries and ought to be read alongside the further Practice Notes suggested.
Tax advantaged share plans—UK and US comparison
All employee plans
The following table compares the US tax-qualified employee stock purchase plan (ESPP) with two tax-advantaged UK all-employee
Share Incentives
PRECEDENTS
[ insert name of company adopting the SAYE scheme ] (the Company)-[ insert Company number ]
Record of a meeting of the [ remuneration committee of the ] board of directors of the Company, convened at [ insert place of meeting ] on [ insert date of meeting ] at [ insert time of meeting ].
Present: [ insert name of director to be Chair ] (the Chair) [ insert names of directors present ]
In attendance: [ insert names of those in attendance ]
Apologies: [ insert names of directors who are unable to attend meeting ]
1 Notice and quorum
[ insert name of Chair ] took the chair for the meeting. It was confirmed that due notice had been issued in line with the Company’s articles of association (the Articles), and that a quorum was in attendance. The Chair accordingly commenced the meeting.
2 Purpose of
Share Incentives
PRECEDENTS
[ Insert name of company adopting the SIP ] (the Company)—[ insert Company number ]
Minutes of a meeting of the [ remuneration committee of the ] board of directors of the Company convened at [ insert place of meeting ] on [ insert date of meeting ] at [ insert time of meeting ].
Present
[ insert name of director to be Chair ] (the Chair)
[ insert names of directors present ]
In attendance
[ insert names of those in attendance ]
Apologies
[ insert names of directors who are unable to attend meeting ]
1 Notice and quorum
[ insert name of Chair ] took the chair for the meeting. It was noted that due notice had been given in line with the Company’s articles of association (the Articles) and that the meeting was quorate. Accordingly, the Chair declared the meeting open...
Share Incentives
PRECEDENTS
Award of free shares under the [ insert name of company ] Share Incentive Plan (SIP)
We are delighted to confirm that you qualify to receive an allocation of free shares through the [ insert name of company ] Share Incentive Plan (SIP). The [ value OR number ] of free shares due to you is [ insert number or value of free shares ] [ subject to a maximum value of free shares of £3,600. ]. Full particulars of your free share award will be shared with you after the award has been finalised, and you will receive the relevant information about your free shares in due course. [ Insert any details of any criteria used to determine the entitlement to free shares (remuneration, length or service or hours worked. ] [ Insert details of any applicable performance allowances ] [ If you want to
Share Incentives
PRECEDENTS
Invitation to buy partnership [ and receive matching ] shares under the [ insert name of company ] Share Incentive Plan
We’re delighted to confirm you qualify to join the [ insert name of company ] share incentive plan now. Through this plan, you can acquire [ insert name of company ] shares by way of regular monthly deductions taken from your pre-tax salary, making participation straightforward and convenient. [ As added benefit, you will also receive [ insert number of matching shares ] extra share [ s ] for every [ insert number of partnership shares ] share [ s ] you purchase (these are called matching shares) ] .
To participate, simply follow the steps set out below when you are ready. [ There is no deadline for applications – you can choose to take part at any time. OR The deadline for
Share Incentives
PRECEDENTS
This agreement is between:
Parties
Participant
Name: [ insert name of participant ]
Home Address: [ insert address of participant ]
Payroll Number: [ insert payroll number of participant ]
Company
Name: [ insert name of company ]
Registered Address: [ insert registered address of company ]
Registered Number: [ insert registered number of company ]
Trustee
Name: [ insert name of trustee ]
Registered Address: [ insert registered address of trustee ]
This agreement explains the basis on which the Participant agrees to participate in Awards of Free Shares in accordance with the Plan. The
Share Incentives
PRECEDENTS
1 Definitions and interpretation
1.1 The terms below shall be interpreted as follows:
Accumulation Period — with respect to Partnership Shares, the span during which the Trustee holds a Qualifying Employee’s Partnership Share Money before buying Partnership Shares or returning it to the employee;
Acquisition Date —
(a) for Partnership Shares where an Accumulation Period is in place, has the meaning given in paragraph 52(5) of Schedule 2;
(b) for Partnership Shares where no Accumulation Period is in place, has the meaning given in paragraph 50(4) of Schedule 2;
(c) for Dividend Shares, has the same meaning given by paragraph 66(4) of Schedule 2;
Associated Company — has the same meaning as in paragraph 94 of
Share Incentives
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