| Commentary

52.4.2 Flowering shares

| Commentary

52.4.2 Flowering shares

Where no ratchet arrangements apply, HM Revenue and Customs accepts that the price paid for the managers’ shares is equal to their initial unrestricted market value (IUMV) where they are restricted shares, and equal to their market value where they are not1. This is however subject to certain conditions being satisfied, namely2:

  1. (a)

        the managers’ shares are ordinary capital3;

  2. (b)

        where leverage is provided by holders of ordinary capital, particularly the venture capitalist, in the form of preferred capital, this is on commercial terms4;

  3. (c)

        the price paid by the managers for their managers’ shares is not

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to LexisLibrary or register for a free trial