| Commentary

52.3.1 Original position

| Commentary

52.3.1 Original position

The position in relation to ratchets was originally equally confusing. Ratchets typically work by diminishing the investor’s share in the value of the company rather than increasing that of the managers. This is usually achieved by providing that some of the investor’s shares be converted into worthless deferred shares, thus indirectly increasing the value of the managers’ stake.

Soon after the implementation of the new regime on employment-related securities, HM Revenue and Customs published, in the form of an answer to a frequently asked question, some examples of ratchet arrangements and their tax effects1, but most of these

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