Unapproved scheme meaning

In this issue: Employment issues New content Company law and regulatory Trackers Dates for your diary Weekly highlights from other practice areas Employment issues Option holder denied chance to exercise options entitled to relief based on proprietary estoppel The High Court has ruled on a claim by Mr Andrew Dixon against GlobalData plc concerning share options under the company’s unapproved employee share option plan (the Plan). Between January 2006 and 31 December 2014, Mr Dixon worked for Canadean Limited, which became a subsidiary of GlobalData after its purchase in September 2010. He received 400,000 options in January 2011 under the Plan. In September 2014, he was notified that his employment would end. After talks with senior management, his termination date was moved to the end of December 2014 on amended terms. The Court found that the then CEO, Mr Simon Pyper, had assured him that his options would “vest in line with current conditions”. Mr Dixon subsequently...

In this issue: Corporate governance Q&As Weekly highlights from other practice areas Corporate governance HSBC and Goldman Sachs to remove bankers’ bonus cap At its AGM this week, shareholders of HSBC Holdings plc approved scrapping the bonus ceiling for material risk takers, enabling the group’s remuneration committee to set what it considers to be appropriate ratios of variable to fixed pay for those individuals. More than 99 per cent of votes backed the resolution. The bank’s cap had reflected requirements that initially applied to UK-based employees under EU rules implemented in the UK—but which were withdrawn with effect from 31 October 2023 by the FCA and PRA via their joint policy statement PS9/23—Remuneration: Ratio between fixed and variable components of total remuneration (bonus cap)—see: Share Incentives weekly highlights—26 October 2023—Company law, governance and regulatory issues. HSBC’s AGM outcome follows reports earlier this week that Goldman Sachs had likewise chosen to lift the cap for its London-based workforce...

At any one time, an individual can be employed by more than one employer, commonly working on a part-time basis for each business. Those businesses might belong to the same group or be entirely unconnected to one another. Participation in numerous Share incentives glossary A–Z—Unapproved share option arrangements is generally not problematic; accordingly, this note concentrates on examining the effect of such simultaneous employments on an employee’s capacity to participate in HMRC statutory tax-advantaged plans, namely: enterprise management incentives (EMI) schemes company share option plan (CSOPs) share incentive plans (SIPs), and save as you earn (SAYE) schemes For more general information on each of these schemes, see Practice Notes: How EMI schemes work and key features How CSOPs work and key features How SAYE schemes work and key features What is a SIP? This Practice Note examines the definitions of connected, group, qualifying subsidiaries, associated and constituent companies for each tax-advantaged share...

Introduction This Practice Note sets out the principal UK tax and legal issues that can arise where an end user intends to provide shares, share options or other forms of equity to an individual in another jurisdiction who is engaged under an arrangement with an employer of record or a professional employer organisation. It looks at both perspectives: a UK end user offering equity to people overseas, and a non-UK end user granting equity to individuals situated in the UK. In every case, the particular rules and regimes of the relevant overseas territories must also be assessed. For a template that an end user can use to grant a share option to an individual engaged via an employer of record arrangement, see Precedent: Standalone unapproved share option agreement for a worker engaged via an employer of record. What is an employer of record structure? ...

The aim of this note is to set out the principal areas in which parallel options are commonly useful, how they interact with other share incentive arrangements, HMRC’s acceptance of such plans and the practical considerations around implementation. The main application of parallel options is either to add tax efficiency to an unapproved share incentive arrangement or to address issues within existing arrangements such as underwater options. Practitioners should exercise particular care when putting in place parallel options that involve a tax-advantaged scheme such as an enterprise management incentives (EMI) scheme or a company share option plan (CSOP). The key points are highlighted below (together with HMRC’s published views). What are parallel options? Parallel options are employee share option arrangements that are linked to another employee share incentive scheme. They will typically be introduced either to enhance another share plan, eg deliver tax efficiency, or to help ‘fix’ problems with the main incentive scheme, eg where options are underwater. They can relate to either phantom options or options...

This Agreement is entered into on [ insert date of execution of the share option agreement ] Parties [ insert name of Company whose shares are being granted under option ] (Company) [ insert name of Option Holder ] (Option Holder) [ [ insert name of Grantor (if different from Company) ] (Grantor) ] BACKGROUND [ As at the date of this Agreement, the Company has agreed to grant the Option Holder an Option to acquire Shares on the terms set out in this Agreement and in line with the rules of the [ insert name of unapproved option plan ] (Rules). OR The Company and the Grantor intend that, as at the date of this Agreement, the Option Holder is to be granted an Option to acquire Shares on the terms stated in this Agreement and in accordance with the rules of the [ insert name of unapproved option plan ] (Rules). ] [ The Company...

FORTHCOMING CHANGE: On 26 November 2025, as part of Budget 2025, the government announced changes due to commence on 6 April 2026. The EMI gross assets threshold will increase from £30 million to £120 million, the upper limit on full‑time equivalent employees will rise from 250 to 500, and the overall cap on the value of unexercised EMI options that a company or group may have outstanding at any one time will go from £3 million to £6 million. In addition, the maximum EMI exercise period will be extended from 10 to 15 years, and existing EMI options can be amended to adopt this longer exercise period without losing tax advantages, provided such amendments are consistent with the legislation that will form part of Finance Bill 2025–26. Furthermore, with effect from April 2027, the obligation to notify HMRC of the grant of EMI options for them to take effect as qualifying options will be removed. This change will be legislated in Finance Bill 2026–27. These measures were confirmed as...

This AGREEMENT is entered into on [ insert date of execution of the share option agreement ] Parties [ insert name of company whose shares are being granted under option ] (company number [ insert registered number of company ]) whose registered office is at [ insert registered address of company ] (the Company) [ and ]; [ insert name of option holder ] of [ insert address of option holder ] (the Option Holder) [ ; and ] [ [ insert name of grantor (if different from company) ] of [ insert address of grantor ] (the Grantor ). ] Background [ As at the date of this Agreement, the Company has agreed to grant the Option Holder an Option to obtain Shares on the terms contained in this Agreement. OR As at the date of this Agreement, the Company and the Grantor intend that the Option Holder shall be granted an Option to obtain Shares on...

The appropriate section of the HMRC annual return to complete hinges on whether the relevant share appreciation right (SAR) or restricted stock unit (RSU) constitutes a securities option for the purposes of s 420(8) of the Income Tax (Earnings and Pensions) Act 2003. In both scenarios, the award counts as a securities option if it grants a legal entitlement to obtain shares, and this, in turn, is determined in practice by the precise terms of the award concerning the method by which settlement may actually occur...