SIPs—qualifying companies and type of shares
Produced in partnership with Jonathan Fletcher Rogers of Addleshaw Goddard

The following Share Incentives practice note produced in partnership with Jonathan Fletcher Rogers of Addleshaw Goddard provides comprehensive and up to date legal information covering:

  • SIPs—qualifying companies and type of shares
  • The company establishing a SIP
  • Constituent companies
  • Selection of constituent companies
  • Companies that may not be constituent companies
  • Qualifying period of employment—qualifying company
  • Qualifying company—examples
  • Jointly owned companies
  • Types of shares
  • Ordinary share capital
  • More...

SIPs—qualifying companies and type of shares

The company establishing a SIP

The company establishing the share incentive plan (SIP) does not have to be the company whose shares are awarded. However:

  1. the shares to be awarded, and

  2. the relationship between the company establishing the SIP and the company whose shares are to be awarded

must satisfy the relevant legislative requirements.

A SIP can be established either:

  1. solely for the benefit of employees of the company that established the SIP, or

  2. for employees of the establishing company and for employees of other companies which it controls (referred to as a group plan)—see: Constituent companies below

In the situation of a group of companies where the parent company's shares are to be awarded, either:

  1. the parent company could establish the SIP and extend it to the relevant subsidiaries, or

  2. each subsidiary could establish its own SIP as long as the parent is listed

The advantage of each subsidiary establishing its own SIP is that it would be able to tailor the terms of each award to its own particular circumstances. Where the SIP is extended by the parent company to its subsidiaries, all employees of each subsidiary must participate on the same terms.

For further information on the SIP employee eligibility requirements, see Practice Note: SIPs—who can be granted an award?

Constituent companies

Where a SIP has been established by a company that is within

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