Q&As

If an enterprise management incentive option does not include express language permitting cashless exercise, would exercising director discretion to vary its terms to include such a provision be considered to be a variation and regrant?

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Published on LexisPSL on 18/02/2021

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • If an enterprise management incentive option does not include express language permitting cashless exercise, would exercising director discretion to vary its terms to include such a provision be considered to be a variation and regrant?

If an enterprise management incentive option does not include express language permitting cashless exercise, would exercising director discretion to vary its terms to include such a provision be considered to be a variation and regrant?

HMRC considers that an amendment to an enterprise management incentive (EMI) option will be the grant of a new right if it involves any change to the fundamental terms of an EMI option that improves the rights of an option holder which is not ‘de minimis’ (see HMRC guidance: ETASSUM54060).

For these purposes, the fundamental terms of an option are:

  1. the number of shares to be acquired

  2. the price at which they are to be acquired

  3. when they can be acquired

In the same guidance, HMRC has confirmed that minor alterations which are not contrary to the requirements of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) will generally be acceptable if they neither affect the

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