| Commentary

52.4.3 Ratchets

| Commentary

52.4.3 Ratchets

Where ratchet arrangements apply, HMRC similarly accept that the price paid for the managers’ shares is equal to their initial unrestricted market value (‘IUMV’) or market value as the case may be, but in this case the conditions are slightly different. The conditions set out in Paragraphs 52.4.2(c) and 52.4.2(e) above do not need to be satisfied, but instead three additional conditions must be met, namely1:

  1. (a)

        the ratchet arrangements are arrangements under which the participation of different holders of ordinary capital in the profits and assets of the company might vary according to the performance of the

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