'Unapproved option' is used to refer to any share option that does not benefit from HMRC tax advantageous treatment.

This AGREEMENT is made on [insert date of execution of the share option agreement] Parties 1 [insert name of company whose shares are being granted under option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company);[and] 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) [and] 3 [[insert name of grantor (if different from company)] of [insert address of grantor] (the Grantor)] Background (A) [The Company has agreed to grant to the Option Holder as at the date of this AGREEMENT an Option to acquire Shares on the terms set out in this Agreement. OR The Company and the Grantor intend that, as at the date of this Agreement, the Option Holder be granted an Option to acquire Shares on the terms set out in this Agreement.] (B) [The Company will satisfy the exercise of the Option by transferring or procuring the transfer of Shares or issuing new Shares. OR The exercise of the Option is intended to be satisfied by the Grantor with existing Shares that the Grantor holds

RULES OF THE [INSERT NAME OF COMPANY] SHARE OPTION SCHEME Adopted by the Directors on [insert date] 1 Definitions 1.1 In this Scheme, except where the context otherwise requires, the words and expressions set out below shall bear the following meanings, namely: Agreement • means, in relation to an Option, the agreement entered into by an Eligible Employee [and the Grantor] which grants the Option, which shall be in such form as the Directors determine from time to time; [Closed Period • means a period when the Directors are prohibited from dealing in shares under the UK Market Abuse Regulation (Assimilated Regulation (EU) 596/2014) or any other regulation, legislation or code on transactions in securities which applies to the Company, including any share dealing code of the Company;] Company • [insert name of company] (Company No [insert registered number]) at [insert company registered address]; Control • has the meaning ascribed to it in ITEPA 2003, s 719; Date of Grant • in respect of an Option, means the date on which the Agreement is entered into by all parties to it, or when the Grantor otherwise grants the Option in accordance with Rule 2.1; Directors

What are unapproved share options? Share options are rights to acquire shares which can be exercised when certain conditions have been met (such as the passing of a time period or the occurrence of an event), provided that the option holder pays a specified amount to acquire those shares at that time. See Q&A: What is the difference between a share and a share option? The term 'unapproved option' is used to refer to any share option which was not granted under any of the statutory tax-advantaged schemes (being a company share option plan (CSOP), an enterprise management incentives (EMI) scheme or a save as you earn scheme (SAYE)), and originates from when the tax-advantaged schemes normally had to be formally approved by HMRC before they could receive the associated statutory tax reliefs. For now, the term continues to be used—despite the fact that, since April 2014, it is no longer necessary to obtain HMRC approval to a statutory tax-advantaged scheme. Unapproved share options can be granted under a standalone unapproved option agreement, or they may be granted under

Specific income tax rules (in sections 471–484 of the Income Tax (Earnings and Pensions) Act 2003 (Part 7, Chapter 5) (ITEPA 2003)) apply to securities options that are employment-related. These are the rules that typically bring unapproved share options within the charge to income tax. For further general information on unapproved options, see Practice Note: Unapproved share options. For further information on employment-related securities, see Practice Note: What is an employment-related security? Alternative rules apply to options granted under the statutory tax-advantaged share option schemes, being: enterprise management incentives (EMI) schemes, save as you earn (SAYE) schemes and company share option plans (CSOPs). For further details of the tax treatment of these share options, see Practice Notes: • Enterprise management incentives (EMI)—income tax and NIC treatment of options • EMI—CGT, including business asset disposal relief and corporation tax relief • CSOP—income tax and NIC treatment of options • CSOP—CGT treatment and corporation tax treatment • SAYE—income tax and NIC treatment of options, and • SAYE—capital gains tax treatment of options This Practice Note explains

Overview The Financial Services and Markets Act 2000 (FSMA 2000) prohibits any person from carrying on a regulated activity in the UK unless they are an authorised or an exempt person. This is known as the general prohibition. A regulated activity is an activity of a specified kind (that is, one which is specified in the FSMA 2000 (Regulated Activities) Order 2001, SI 2001/544 which is carried on by way of business in the UK. A breach of the general prohibition is a criminal offence punishable by a fine or imprisonment. This Practice Note introduces how the Financial Conduct Authority (FCA) enforces against unauthorised business. Further information on unauthorised business can be found in Practice Note: Unauthorised business—legal and regulatory framework. Key points are: • the FCA’s supervisory and enforcement arms are focused on disrupting unauthorised firms and individuals who seek to defraud customers and warning customers • the FCA’s Warning List—a list of firms not authorised or registered by the FCA and which the FCA knows are operating without permission or running

There is a fundamental prohibition at the heart of the UK regulatory regime whereby a person cannot carry out a regulated activity in the UK, or purport to do so, unless they are either: • authorised (by the appropriate regulator), or • exempt This is known as the general prohibition and it is found in the Financial Services and Markets Act 2000 (FSMA 2000), s 19. The inclusion of the phrase 'or purport to do so' means that a person will breach the general prohibition even where they do not carry out a regulated activity but represent that they do or attempt to carry it out. More information on the general prohibition, exemptions and the regulators can be found in: The general prohibition—overview, The general prohibition and implications of its breach, FCA—corporate governance, UK regulators—financial services—overview, What are regulated activities?, Regulated activities—specified activities and investments—overview, FCA and PRA authorisation under Part 4A of FSMA 2000. Businesses, firms and individuals coming fresh to the financial services market or engaging in new activities need to

An unauthorised member payment is: (1) a payment by a registered pension scheme to or in respect of a member or a former member of that pension scheme that is not an authorised member payment; or (2) anything which is treated as being an unauthorised payment to or in respect of a member or former member under Part 4 of the Finance Act 2004.

This Practice Note explains the prohibition on the unauthorised or harmful deposit, treatment or disposal of waste under section 33 of the Environmental Protection Act 1990 (EPA 1990) in England and Wales only. For information on the offence as it applies to Scotland, see Practice Notes: Key environmental offences in Scotland, Scottish Environment Protection Agency—powers to investigate environmental crimes and Sentencing environmental offences in Scotland. EPA 1990, s 33 is one of the most prosecuted environmental offences ranging from small-scale fly-tipping to large scale waste disposal without a permit. It imposes strict liability in respect of the ‘deposit’ of controlled waste, but requires knowledge in respect of ‘knowingly causing or knowingly permitting’ controlled waste to be deposited. The Environmental Permitting (England and Wales) Regulations 2016 (EPR 2016), SI 2016/1154 also contain offences for not holding an environmental permit, breaching permit conditions or failing to comply with an enforcement notice, see: Environmental permits and exemptions—overview and Practice Note: Environmental Permitting Regulations 2016—waste installations, waste operations and exempt waste operations. Scope

A payment made to a member or employer by a registered pension scheme that is not author-ised by HMRC.

Tax charge that arises when an unauthorised payment is made by a registered pension scheme.

A tax charge that arises when a surchargeable unauthorised member payment or a surchargeable unauthorised employer payment is made by a registered pension scheme.