CSOP—exchange of share options (rollover)
Published by a LexisNexis Share Incentives expert
Practice notesCSOP—exchange of share options (rollover)
Published by a LexisNexis Share Incentives expert
Practice notes
The requirements for a company share option plan (CSOP) rollover are complex. This note will examine:
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what is a CSOP rollover?
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the reasons for using a CSOP rollover
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the circumstances in which an CSOP rollover can be used
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the eligibility criteria which must be satisfied for a CSOP rollover
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the timing requirements of a CSOP rollover
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the effect of granting replacement options
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selective and partial rollovers, and
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common misunderstandings and mistakes relating to CSOP rollovers
What is a CSOP rollover?
The CSOP legislation provides the ability for replacement options to be granted to existing option holders following a takeover of the scheme company (whose shares were under option) in a manner which ‘rolls over’ the beneficial tax status of the original CSOP options into the new ones. The replacement CSOP options are 'equivalent' to the original options but are over shares in the acquiring company. Although the term 'rollover' of options is in common use, the legislation refers to a 'release' of old options in consideration of
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Share option definition
What does Share option mean?
A share option is an agreement between the holder of shares and a third party. An option gives one party the right (but not an obligation) to purchase shares at a specified price at a specified point of time (or on the occurrence of a specified event).
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