Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Shares definition

What does Shares mean? In company law practice, a share is a unit of a member’s interest in a company, carrying the rights and obligations attached to its class (for example, voting, dividends and return of capital on a winding up). The Companies Act 2006 simply states that a share is a share in a company’s share capital; the Irish Companies Act 2014 adopts a broadly equivalent approach. Usage and effect are consistent across England & Wales, Scotland, Northern Ireland and Ireland. A company’s share capital comprises the number of shares it allots and issues to investors on or after incorporation. Those...

Individual shareholders settling employee share options: UK company law, FSMA exemptions, plan design, dilution, and tax including CGT, IHT, PAYE and NICs, disguised remuneration, plus accounting and ERS reporting

Published by a LexisNexis Share Incentives expert

Practice notes

A share option gives an employee a binding right to purchase shares at a fixed price, provided specified conditions are met. The option agreement between the grantor and the employee will usually also state who must procure the shares and settle the option when it is exercised. Shares are commonly provided either by the company or by an authorised third party entitled to grant an option, such as an individual shareholder, corporate shareholder, or a trustee of an employee benefit trust (EBT). A third-party shareholder can also agree to fulfil options granted by the company by transferring their own shares on exercise of the options.

This Practice Note considers the situation where a UK tax resident individual is the one who satisfies the share option and specifically examines:

reasons an individual may choose to make their shares available
procedural steps and paperwork
non-tax factors relating to the individual’s holding
tax implications
accounting impacts and share plan reporting
scenarios involving more than one individual shareholder
leaving shares by will

Typically, the individual shareholder will dispose of their shares for the exercise price specified in...

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William Cookson

St. James's Place Wealth Management

Will Cookson is head of Partner Structures, Development & Guidance at St. James's Place Wealth Management, having previously been an employee share plans specialist with PwC, Harbour Key, Mazars, Grant Thornton, GE Capital and EY....

Web page updated on 21/05/2026

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