The following Share Incentives guidance note Produced in partnership with Karen Cooper of Cooper Cavendish provides comprehensive and up to date legal information covering:
This note looks at the issues arising on the death of a participant in both HMRC tax-advantaged schemes and various unapproved share scheme arrangements. It also looks at the practical issues in relation to the death of an employee shareholder who may have acquired shares under such arrangements.
It is common in most employee share schemes to treat death as a 'good leaver' situation (see Practice Note: Different treatment for different types of leavers). This will often mean that early vesting or exercise of awards will be triggered.
Where the scheme involved is an option arrangement, the personal representatives of the deceased participant will be entitled to exercise options during a fixed period of time (usually 12 months following death). Similarly, options which have already vested will usually need to be exercised during a set period from the date of death, after which they will lapse. The period for exercise for most schemes is usually 12 months from the date of death as this satisfies the requirements of the legislation for tax-advantaged schemes (see Death of an employee option holder or shareholder—HMRC tax-advantaged schemes). It also should provide sufficient time for the deceased's executors to apply for a grant of representation, or where the participant dies intestate, for the
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