Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Options definition

What does Options mean? In legal practice, an option is a contractual right, not an obligation, to buy (a call) or sell (a put) an identified underlying (for example shares, commodities or currency) at an agreed strike price either on the expiry date (European-style) or at any time up to expiry (American-style). The holder pays an option premium for this right; key terms include the underlying and quantity, strike, expiry and the settlement method (physical delivery or cash settlement). Options are used to hedge risk, obtain price protection or leverage exposure, and are fundamental in derivatives, corporate finance and remuneration structures. The term is...

UK CSOP option exercise: material interest restrictions, death, good leaver terms, corporate and PISCES triggers, HMRC 20-day grace periods, and conditions for tax-advantaged treatment and discretion parameters

Published by a LexisNexis Share Incentives expert

Practice notes

Ordinarily, the statutory framework for company share option plans (CSOPs) does not prescribe the timing or circumstances in which CSOP share options may, or might later, become exercisable, so a company retains discretion when drafting the exercise provisions of its scheme. Accordingly, employers may align the plan’s operation with their commercial objectives. The carve-outs to that general position are that CSOP legislation does stipulate that:

the scheme must prevent a qualifying CSOP option from being exercised where the option holder holds a material interest in a relevant company
where the scheme allows CSOP options to be exercised on the option holder’s death, the rules must expressly require that those CSOP share options are exercisable for a fixed 12-month period after death. This applies irrespective of any other exercise rule in the plan, other than on a company winding up (and includes any term providing that no exercise is permitted more than ten years after grant)
the scheme may allow a qualifying CSOP option to be exercised early within six months of specified company events, as detailed in the applicable scheme rules from time to time, and
tax-advantaged treatment will not be available unless the CSOP share option is exercised in...

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Web page updated on 22/05/2026

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