Q&As

Is the grant of a nominal value share option by a listed company to a non-executive director unlawful financial assistance?

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Published on LexisPSL on 18/12/2019

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

  • Is the grant of a nominal value share option by a listed company to a non-executive director unlawful financial assistance?

Although the courts have held that the Companies Act 2006 (CA 2006) does not give a technical definition of ‘financial assistance’, CA 2006 does provide examples of the types of transactions which constitute financial assistance. Looking at these, we consider it unlikely that there is any financial assistance in the given scenario. 

In regard to the point of whether the grant of an option to a non-executive director (NED) on this basis could fall within CA 2006, s 677(1)(a) as a gift, at least to the extent of the difference between the shares’ nominal value and their market value, it could be argued that a distinction needs to be made between where the shares being used to satisfy the option are being issued by the company and where the shares are being purchased in the mar

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