convertible shares meaning

In this issue: Budgets, Statements and Finance Bills Tax treatment Corporate governance Regulatory matters Dates for your diary Weekly highlights from other practice areas Budgets, Statements and Finance Bills Spring Statement 2025 On 26 March 2025, the Chancellor, Rachel Reeves, presented the government’s Spring Statement. From a Share Incentives standpoint, the standout news was a policy paper detailing HMRC’s approach to the treatment of companies and employees trading shares on the Private Intermittent Securities and Capital Exchange System (PISCES). The Treasury plans to lay a statutory instrument before Parliament in May 2025 to establish the legal framework for the PISCES Sandbox. Once that legislation has been laid, the Financial Conduct Authority will release its rules, and the PISCES Sandbox will come into being. Key points in the policy paper (available here) include: where, at the point an employee acquires shares, arrangements are in place for those shares to be traded on a PISCES platform,...

What is a long-term incentive plan? As set out in the Practice Note: What is a long-term incentive plan?, the awards most frequently delivered under a long-term incentive plan (LTIP) typically comprise: conditional share awards (often referred to in the US as restricted stock units (RSUs)) nil-cost options share appreciation rights (SARs) forfeitable shares, sometimes described as restricted stock A brief summary outline of the likely capital gains tax (CGT) treatment on disposals of shares obtained on the vesting of each LTIP award type is set out below. For more detail and background on the different award types available under an LTIP, see Practice Note: Structure of a long-term incentive plan—Types of awards for further guidance. Please note that this Practice Note proceeds on the basis that, at acquisition of the shares or otherwise on vesting of the LTIP awards, the employee has been fully subject to income tax and, where the shares are readily convertible, national insurance...

What does this Practice Note cover? This Practice Note sets out an explanation of warrants (often termed securitised derivatives) and considers: what warrants are types of warrants key warrant terminology how warrants are listed and offered how warrants are documented, and the differences between warrants and comparable instruments What are warrants? A warrant is a tradeable security that grants the holder the right, but not the obligation, to: buy or sell a specified asset (the underlying asset, or simply the underlying) at a specified price (the exercise price or strike price) on a specified date or dates (the exercise date(s)) A warrant is a type of derivative—its value is derived from the underlying asset and offers exposure to that value without owning the asset. They are sometimes described as securitised derivatives, ie derivatives embodied in securities. A warrant is not a debt security and so has no principal...

The need to value employee shares When contemplating offering shares to employees, whether directly and/or via a share plan, employer companies and existing shareholders must reflect on what the shares are worth for several reasons, including: determining how many shares are needed to meet their objectives (valuing existing shares can indicate a need to sub-divide current shares and/or establish a new class) assessing the tax that may arise on acquisition and on any later chargeable events (for example, for PAYE purposes and/or to enable an employee and the company to decide whether to make an election in relation to restricted shares), particularly in respect of: convertible securities restricted securities securities with artificially depressed or enhanced market values securities acquired for less than market value, and securities disposed of for more than market value providing information to an employee acquiring restricted shares and to the employing company that is considering entering...

Strictly private and confidential The Directors [ Insert offeree’s name ] plc [ Insert offeree address ] Date: [ insert date ] STOP PRESS : Significant reforms to the UK prospectus regime came into force on 19 January 2026. Key provisions for UK public securities offers and admissions to trading primarily sit in the Public Offers and Admissions to Trading Regulations 2024 (POATRs), SI 2024/105, with a new FCA sourcebook called The Prospectus Rules: Admission to Trading on a Regulated Market (PRM). The UK Prospectus Regulation and the FCA Prospectus Regulation Rules have now been revoked in their entirety. These reforms aim to streamline capital raising and materially cut the number of situations in which a company must produce an FCA-approved prospectus for subsequent share issues, particularly for further issues of shares. For comprehensive details on the reforms, see Practice Note: UK prospectus regime reform. This Practice Note describes the UK prospectus framework as it stood before 19 January 2026...

Insert new Article 14 as set out below: 14. Anti-dilution 14.1 In this Article 14, unless the context indicates otherwise, the expressions below shall bear the definitions: New Securities means any Shares or other securities convertible into, or conferring the right to subscribe for, Shares, issued by the Company after the date these Articles were adopted...

Explanatory statement (pursuant to section 897 of the Companies Act 2006) [ insert name of offeree’s financial advisers ] [ insert address of offeree’s financial advisers ] To: holders of [ Offeree ] Shares, persons with information rights and, for information purposes only, holders of options under the [ Offeree ] Share Plans Dear [ Offeree ] Shareholder Recommended Cash Offer for [ insert offeree name ] by [ insert offeror name ] 1 Introduction On [ insert date ], the boards of [ Offeror ] and [ Offeree ] confirmed that they had reached agreement on the terms of a recommended cash proposal [ for OR by [ Offeror ] to acquire ] the whole of the issued and to be issued ordinary share capital of [ Offeree ]. The proposal will now be carried out by way of a Court‑sanctioned scheme of arrangement under Part 26 of the Companies Act 2006. Please refer to Part One (Letter from the Chair of...