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GLOSSARY

Holding period definition

Published by a LexisNexis Corporate expert

What does Holding period mean?

This is the length of time that an investment is held. For example, if Company A invests in Company B in June 1996 and then sells its stake in June 1999, the holding period is three years

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SIP—checklist

SIP—checklist A share incentive plan (SIP) gives employees the opportunity to acquire shares in their employer or a parent company of the employer in a tax efficient manner. The legislative framework governing SIPs is mostly contained in: • Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), which sets out how the SIP can be operated and the main conditions that have to be satisfied for the SIP to be a ‘Schedule 2 SIP’, and • ITEPA 2003, Pt 6 Ch 7 (ITEPA 2003, ss 488–515), which sets out how shares acquired under a SIP are treated for income tax purposes For further more general information on SIPs, see Practice Note: What is a SIP? Below is a checklist of the main issues to be considered before implementing or operating a SIP. It assumes that the SIP Trust Deed and Rules are compliant with ITEPA 2003, Sch 2. See Precedents: SIP rules and SIP trust deed. • Preliminary considerations ◦ is the SIP the most appropriate...

Exercise of share options—all-encompassing resource pack

Exercise of share options—all-encompassing resource pack This all-encompassing resource pack contains a step-by-step guide for a company administering the exercise of employee share options and the subsequent allotment/transfer of shares, and contains links useful resources to assist in this process. This resource pack can be used in relation to the exercise of enterprise management incentives (EMI) options, company share option plan (CSOP) options, or unapproved share options (including those granted under a long-term incentive plan (LTIP) and can be used as a reference for both private and listed companies. It is not suitable for use in relation to the exercise of Save as you earn (SAYE) options. Step Details of step Useful resources Timing of step 1 Do the terms governing the option permit the exercise of the option in the given circumstances? Has the option already lapsed so that it can no longer be exercised? The ability to exercise will very much depend upon the relevant option documentation, as there is considerable flexibility regarding the design...

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Directors’ remuneration—quoted and unquoted traded companies

Directors’ remuneration—quoted and unquoted traded companies This Practice Note outlines the regulatory framework for remuneration of directors of quoted and unquoted traded companies against the current backdrop of increased shareholder activism and media attention on executive pay packages. It summarises the statutory directors' remuneration reporting regime for quoted companies and unquoted traded companies and notes relevant provisions of the Companies Act 2006 (CA 2006), the UK Listing Rules, the UK Corporate Governance Code (UKCG Code) of the Financial Reporting Council (FRC) and best practice guidelines relating to executive remuneration. Directors’ remuneration—law, regulation and best practice Legislation The CA 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, SI 2008/410 (2008 Regulations) impose requirements on the directors of a quoted company and unquoted traded company to disclose prescribed details of directors' remuneration in a remuneration report to be prepared annually. CA 2006 defines a quoted company as a UK company whose equity share capital: • has been included in the Official...

Why do companies use share schemes?

Why do companies use share schemes? Why not just reward staff with cash? It is often a simpler, less burdensome way to reward and incentivise employees. This Practice Note analyses the advantages and disadvantages of shares schemes as a general concept. For further details on the advantages and disadvantages of each individual type of scheme, see Practice Note: The advantages and disadvantages of each share incentive arrangement. This Practice Note details: • why do companies implement share schemes? • what are the types of share schemes? • the advantages of share schemes (from a company and employee perspective) • the disadvantages of share schemes (from a company and employee perspective), and • use of share schemes Why do companies implement share schemes for their employees? There are numerous reasons why companies choose to implement employee share schemes and many of these depend on the size of the company and its specific objectives. Some common reasons for companies utilising share schemes include, but are not limited to: • recruiting,...

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LTIP—restricted award certificate

LTIP—restricted award certificate [insert name of company who granted the award pursuant to the long term incentive plan (LTIP)] (Company) [insert name of LTIP] (Plan) Name Number of Shares under Award Date of Grant Normal Vesting date[, subject to satisfaction of Performance Targets] End of Holding Period This is to certify that you are the holder of a Restricted Award to acquire up to the maximum number of Shares in [insert name of Company whose shares are being granted under award] as stated in the table above. The Restricted Award was granted on the Date of Grant stated above under a global deed of grant executed by the Company [and is subject to the Performance Target(s) attached to this certificate]. The Restricted Award was granted under, and is subject to, the Rules of the Plan. The RULES REQUIRE YOU TO sign A PARTICIPANT AGREEMENT within [30] Days of the grant of the award IN ORDER TO CONFIRM YOUR ACCEPTANCE OF...

LTIP—option certificate

LTIP—option certificate [insert name of company who granted the option pursuant to the long term incentive plan (LTIP)] (Company) [insert name of LTIP] (Plan) Name Number of Shares under Option Option Price per Share Date of Grant Normal Vesting date[, subject to satisfaction of Performance Targets] End of Holding Period This is to certify that you are the holder of an Option to acquire up to the maximum number of Shares in [insert name of Company whose shares are being granted under option] as stated in the table above. The Option was granted on the Date of Grant stated above under a global deed of grant executed by the Company [and is subject to the Performance Target(s) attached to this certificate]. The Option Price payable on the exercise of the Option is also set out in the table above. The Option was granted under, and is subject to, the Rules of the Plan. The Option is exercisable only in accordance with, and subject to the...

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Can you tax-efficiently dispose of share incentive plan (SIP) shares in the event of a scheme of arrangement where the consideration per SIP share is a mix of cash and shares?

Can you tax-efficiently dispose of share incentive plan (SIP) shares in the event of a scheme of arrangement where the consideration per SIP share is a mix of cash and shares? Participants are able to sell their share incentive plan (SIP) partnership shares at any time and any free, matching or dividend shares, provided the holding period in respect of them has been completed. However, to get the full income tax and National Insurance contributions (NICs) advantages, a participant will normally have to keep all the shares in the plan for at least five years (or three years for dividend shares). However, the SIP rules permit disposal of SIP shares before the end of a holding period on the court sanctioning of a scheme of arrangement if the scheme is applicable to or affects: • all of the ordinary share capital • all of the shares of the same class as the SIP shares, or • all the shares, or all the shares of the class...

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Private Client weekly highlights—19 June 2025

This week’s edition of Private Client highlights includes: (1) tribunal finds rule 11(7)(b) errors in Mental Health detention proceedings (KH v Nottinghamshire Healthcare NHS Foundation Trust); (2) taxpayer wins £1.9m in a longstanding SDLT dispute (Candy v HMRC) and FTT rejects taxpayers’ claims for entrepreneurs’ relief (Moffat v HMRC); (3) a son’s proprietary estoppel claim fails (Grijns v Grijns); (4) discussion of the recent conviction of an art dealer for breach of counter-terrorism financing rules; (5) the Pensions Ombudsman rejects two member complaints involving transfers to pension liberation vehicles; and (6) the Data (Use and Access) Bill passes through Parliament and heads for Royal Assent.

Tax weekly highlights—12 June 2025

This week's edition of Tax weekly highlights includes: (1) the publication of the government’s response to the consultation on the tax treatment of carried interest, (2) the impact of the Spending Review on HMRC, (3) an update to the FTT’s guidance on oral evidence from abroad and (4) HMRC’s update on capital allowances areas of uncertainty.

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