C2.806 Quoted share options
This article describes the treatment of transactions involving quoted share options; the treatment of options generally is described in Division C2.10.
A quoted option means an option which, at the time of its abandonment or disposal is listed on a recognised stock exchange1. A quoted option is not a wasting asset2.
The issue by a company to its shareholders of an option to subscribe for shares in the company is not a distribution because it is a disposal of an asset3 and does not in itself constitute a reorganisation.
Provided certain conditions are satisfied, where a quoted option is issued at the same time as a reorganisation, reduction, conversion, exchange or reconstruction4, the option is regarded as the shares which could be acquired by exercising the option5. By concession, HMRC used to