Put option meaning

Call or put option? In a call option, the purchaser holds the reins, as it may demand transfer of the asset. The seller should recognise that its intentions for the site could be curtailed by that right, and plans for the property restricted. A put option, by contrast, places control with the seller, enabling it to require the purchaser to take the property and complete the acquisition, obliging the buyer to buy. Option period For a call option, the vendor should be mindful that the land could be effectively frozen throughout the option window, potentially sterilising its use. Accordingly, the deal ought to state a clear long‑stop date to cap the period. The Perpetuities and Accumulations Act 2009 (PAA 2009) removed the rule against perpetuities for options, so those granted on or after 6 April 2010 do not need a specified long‑stop date in this context. Before PAA 2009, a call option lapsed if not exercised within 21 years. Where exercise depends on the buyer securing...

Call or put option? Under a ‘call’ option, the purchaser holds the reins, as it can demand a transfer of the property. By contrast, a ‘put’ option leaves the seller in charge, enabling it to compel the purchaser to complete a transfer. Accordingly, the purchaser must take particular care that the transfer provisions—especially on valuation and, where relevant, insurance—are as advantageous as possible. Seller's charges If the property is charged when the option is granted, the mortgagee might defeat the option by using its power of sale. To guard against this, ensure the mortgagee either: becomes a party to the agreement (uncommon in practice), or gives written consent to the grant of the option In both scenarios, the mortgagee should confirm that, if the purchaser exercises the option, it will take the property free of the charge; or, if the mortgagee sells under its power, it cannot dispose of the property free of the option. Is the exercise of...

The FCA’s biggest fine of 2024 so far signals its expectation that financial crime controls at a scaling business must mirror the organisation’s size and complexity—something lawyers say did not occur at Starling. ‘Starling’s case is a cautionary tale for those with ambitious plans to expand,’ said James Alleyne, legal director at Kingsley Napley LLP. ‘Breakneck growth can be commercially tempting, but if it comes at the cost of compliance, firms put themselves and their customers at needless risk and can find themselves in difficulty with the regulator.’ Alleyne points to Starling’s breach of a voluntary requirement, or VREQ, as a particularly notable element of the matter. A VREQ is where a firm voluntarily asks the FCA to restrict aspects of its business activities. Practitioners often treat the “voluntary” tag as a euphemism for “voluntary or else”, although it is generally the least bad option open to firms. The alternative is for the FCA to impose a requirement. Breach of VREQ The FCA had placed a VREQ...

In this issue Q&As Useful information Weekly highlights from other practice areas Q&As New Q&A When setting up growth shares in a subsidiary where value is expected to be realised through a sale to the parent under a put option, must the put’s terms appear in the issuer’s articles, or can they sit in the subscription agreements instead? This Q&A examines a scenario where the growth shareholder benefits from a put allowing them to require a purchase at a defined time for a price that disregards any minority discount. It considers whether those put terms need to be embedded in the issuing company’s articles of association, drafted so they advantage any hypothetical buyer or holder of the shares, to manage the risk of an income tax charge under the employment-related securities rules where disposal occurs for more than market value on exercise of the put... Useful information Rough tax justice—finally?...

What is the background to the TMO4+ grid connection reforms? TMO4+, short for ‘Target Model Option 4 Plus’, is an extensive suite of reforms led by NESO (originally initiated by its predecessor, National Grid Electricity System Operator (NGESO)), and supervised—and now approved—by Ofgem, reshaping the process for securing connections to the electricity transmission and distribution networks in GB. The TMO4+ package developed from earlier ‘TMO4’ proposals (‘first ready, first connected’) put forward by NGESO as its preferred option in the Connections Reform: Final Recommendations Report (December 2023). That work aimed to deliver the ambition set by the Department for Energy Security and Net Zero (DESNZ) and Ofgem of grid ‘transmission connection dates being offered to customers on average no more than 6 months beyond the date requested for viable, net zero aligned projects…’ The revised framework departs from the existing ‘first come, first served’ model for GB grid connections. In its place is a more centrally co-ordinated arrangement that ranks projects by evidential readiness and strategic fit, commonly...

A business might need to secure extra capital for a variety of purposes. It could, for example, be to finance a planned acquisition or to satisfy continuing financial commitments. There are several routes by which a company can obtain the extra funding required, including tapping existing shareholders through a rights issue, an open offer or a placing. When running a rights issue, open offer or placing, the company must carefully assess the effect on any current employee share plans it operates. This assessment should take place as early as possible in the decision-making process to determine whether, and if so what, steps can be taken so that employees are not put at an unfair disadvantage by a rights issue, open offer or placing. This Practice Note outlines the key points that typically arise in connection with employee share plans on a rights issue, open offer or placing, the steps that will usually need to be taken in relation to outstanding options and awards, and the relevant tax treatment. ...

Practice Note While EMI share options can be highly tax‑efficient, they also carry notable traps. Poor drafting or faulty implementation can lead to serious tax consequences for both staff and the business. This Practice Note highlights the most frequent misconceptions and errors when: determining if a company is eligible to grant EMI options setting up an EMI scheme, and running an EMI scheme Specifically, it explains: what counts as an EMI option the fall‑out if an EMI option is drafted or put in place improperly the impact of mishandling an EMI qualifying option in operation recurring misunderstandings and errors when testing company eligibility to grant EMI options recurring misunderstandings and errors when establishing an EMI scheme recurring misunderstandings and errors when operating an EMI scheme, and ways to prevent errors and misconceptions when dealing with EMI options This Practice Note addresses only the common misunderstandings and mistakes concerning EMI...

ARCHIVED: This Practice Note is archived and is no longer maintained. It summarises the principal changes to UK banking reform brought in by the Financial Services (Banking Reform) Act 2013 (FS(BR)A 2013, the Banking Reform Act). The legislation delivered major reforms to UK financial services regulation, granting HM Treasury and the Prudential Regulation Authority (PRA) the powers required to put into effect recommendations by Sir John Vickers and the Independent Commission on Banking (ICB) on ring-fencing for the banking sector, and also introduced: a criminal offence of reckless misconduct in running a bank a payment systems regulator (PSR) the senior managers and certification regime (SM&CR) a bail-in stabilisation option within the special resolution regime (SRR) a cap on the cost of payday loans Background to the Banking Reform Act On 18 December 2013, the Banking Reform Act received Royal Assent. The statute comprises eight Parts and ten Schedules. In particular, it gave HM Treasury and the relevant regulators,...

This [ Agreement OR DEED ] is entered into on [ insert day and month ] 20[ insert year ] Parties [ insert name of buyer ] [ of [ insert address ] OR trading as [ insert trading name ] of [ insert address ] OR a firm with its principal place of business at [ insert address of firm ] OR [ an LLP OR a company ] incorporated in [ insert place of incorporation, eg England and Wales ] with registered number [ insert registered number ] whose registered office is at [ insert address ] ] (the Buyer); and [ insert name of seller ] [ of [ insert address ] OR trading as [ insert trading name ] of [ insert address ] OR a firm with its principal place of business at [ insert address of firm ] OR [ an LLP OR a company ] incorporated in [ insert place of incorporation, eg England and Wales ] with...

date [ date ] Parties [ name of (first) Seller ] [ and [ name of second Seller ] both ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Seller) [ name of Buyer ] [ of OR incorporated in England and Wales (company registration number [ number ]) whose registered office is at [ address ] ] (Buyer) 1 Definitions For this Agreement, the terms below shall have these meanings: Buyer’s Solicitors – [ name ] of [ address ] (reference [ details ]) or any other solicitors the Buyer notifies to the Seller; Deposit – £[ amount in figures ] ([ amount in words ] pounds); [ Independent Surveyor – an independent chartered surveyor with at least [ 10 ] years’ experience in valuing property of a comparable type and in a comparable location to the Property; ]...

This [ Agreement OR DEED ] is dated [ insert day and month ] 20[ insert year ] Parties [ insert name of buyer ] [ of [ insert address ] OR trading under the name [ insert trading name ] at [ insert address ] OR a firm with its principal place of business at [ insert address of firm ] OR [ an LLP OR a company ] incorporated in [ insert place of incorporation, eg England and Wales ], registered number [ insert registered number ], whose registered office is at [ insert address ] ] (the Buyer), [ insert name of seller ] [ of [ insert address ] OR trading under the name [ insert trading name ] at [ insert address ] OR a firm with its principal place of business at [ insert address of firm ] OR [ an LLP OR a company ] incorporated in [ insert place of incorporation, eg England and Wales ], registered...