CSOP—requirements for the options: market value
CSOP—requirements for the options: market value

The following Share Incentives practice note provides comprehensive and up to date legal information covering:

  • CSOP—requirements for the options: market value
  • How is the market value calculated?
  • Meaning of market value
  • Exercise price
  • The test
  • Determination of the market value on an earlier date
  • Restrictions on shares
  • Flotations
  • The £30,000 limit
  • The limit
  • More...

The market value of shares granted under company share option plan (CSOP) options must be determined in order to ensure that:

  1. the exercise price complies with the CSOP legislation

  2. the CSOP maximum individual limit of £30,000 is not exceeded

  3. an adjustment to the option following a variation in the share capital is permitted under the CSOP legislation, and

  4. any exchange of options qualifies for the purposes of the CSOP legislation

This Practice Note considers how the market value is calculated and seeks to illustrate its use in each of the above scenarios.

How is the market value calculated?

Meaning of market value

This section provides a brief overview of the valuation process for both listed and unlisted companies. For more detailed information including information on HMRC's practice in relation to CSOP valuations, see Practice Note: Company share option plan valuations.

For the purposes of the CSOP legislation, market value has the same meaning as in sections 272–290 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992).

Listed shares

If the shares under option are quoted on the London Stock Exchange, the market value is on any day the Stock Exchange is open, the lower of the two prices shown in the Stock Exchange Daily Official List for that day as the closing price for the shares, securities or strips on that day plus one-half of the difference between those two

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