CSOP valuations

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

  • CSOP valuations
  • Why do you need to obtain a CSOP valuation?
  • Necessity to determine the market value of the shares at the time of grant of a CSOP option
  • Necessity to determine the market value of the shares on the exercise of a CSOP option
  • Necessity to determine the market value of the shares during the life of the share option
  • Necessity to determine the market value of the shares on a CSOP rollover
  • Necessity to determine the market value of the shares on a variation of share capital
  • Determination of the market value on an earlier date
  • Restricted shares and CSOP valuations
  • CSOP valuation process for a public company
  • More...

CSOP valuations

Why do you need to obtain a CSOP valuation?

A valuation of the shares granted under company share option plan (CSOP) options will often be required at different stages of the share option's life.

Necessity to determine the market value of the shares at the time of grant of a CSOP option

A share valuation at the time of grant of CSOP options may be required:

  1. to ensure that the exercise price complies with the CSOP legislation stating that the exercise price of the options must be:

    1. stated at the time of grant, and

    2. not manifestly less than the market value (ignoring any restrictions) of shares of the same class at the time of grant or at such earlier time as may be determined in accordance with guidance issued by HMRC (see Determination of the market value on an earlier date below)

  2. to ensure that the initial unrestricted market value (UMV) of the relevant shares (the market value of a share ignoring any restrictions and risks of forfeiture) under option does not exceed the CSOP individual limit of £30,000. For further details on the CSOP limit see Practice Note: CSOP—requirements for the options: market value, and

  3. to determine whether and, if so, the extent to which the option is taxable on grant. The option will be taxable on grant where the aggregate of the:

    1. amount of

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