"While we began looking at ÑÇÖÞÉ«ÇéÍø products primarily for cost saving, it quickly became more about customer service, ease of onboarding, ongoing training and breadth of resources available."
Co-Op
Access all documents on Unapproved share option
'unapproved option' is used to refer to any share option that does not benefit from HMRC tax advantageous treatment.
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 take the form of a standalone unapproved option scheme or form part of an EMI scheme or CSOP.
Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.
For our full legal glossary and more legal research sources, register for a free Lexis+ trial
Granting unapproved share options pursuant to a standalone share option deed—all-encompassing resource pack For more general information on unapproved share option schemes, see Practice Note: Unapproved share options. Step Details of step Resources required to implement step Timing of step 1 Determine whether the company qualifies to operate a tax-advantaged share scheme Unapproved share options are often, but certainly not always, used when a company, or the employee, does not qualify to grant or be granted tax-advantaged share options (ie enterprise management incentives (EMI) schemes, company share option plans (CSOPs), save as you earn (SAYE) schemes, and share incentive plans (SIPs)). It is therefore important to first determine whether a tax-advantaged share scheme is possible and appropriate. For further detailed information on the eligibility criteria for the tax-advantaged share schemes, see Practice Notes: How EMI schemes work and key features, How CSOPs work and key features, How SAYE schemes work and key features and What is a SIP?. As early as possible but before step 3 2...
Granting unapproved options pursuant to rules and an accompanying option agreement—all-encompassing resource pack For more general information on unapproved share option schemes, see Practice Note: Unapproved share options. Step Details of step Resources required to implement step Timing of step 1 If appropriate, review whether the company qualifies to operate a tax-advantaged share scheme as an alternative Unapproved share options are often, but certainly not always, used when a company, or the employee, does not qualify to grant or be granted tax-advantaged share awards (ie under enterprise management incentives (EMI) schemes, company share option plans (CSOPs), save as you earn (SAYE) schemes, and share incentive plans (SIPs)).It may therefore be important to first determine whether a tax-advantaged share scheme is possible and appropriate. For further detailed information on the eligibility criteria for the tax-advantaged share schemes, see Practice Notes: How EMI schemes work and key features, How CSOPs work and key features, How SAYE schemes work and key features and What is a SIP? As early as...
Discover our 3 Checklists on Unapproved share option
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...
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 tax-advantaged share options such as: 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 optionsThis Practice Note explains the tax treatment of unapproved share options, which is broadly as follows:•no income tax (or National...
Discover our 23 Practice Notes on Unapproved share option
Board minutes—approving the adoption of an unapproved option plan and the grant of unapproved options [insert name of company adopting the unapproved option plan] (Company)—[insert Company number] Minutes of a meeting of the[ remuneration committee of the] board of directors of the Company held at [insert place of meeting] on [insert date of meeting] at [insert time of meeting]. Present [insert name of director to be Chair] (the Chair) [insert names of directors present] In attendance [insert names of those in attendance] Apologies [insert names of directors who are unable to attend meeting] 1 Notice and quorum [insert name of Chair] was appointed Chair of the meeting. It was reported that proper notice of the meeting had been given in accordance with the Company's articles of association (Articles) and that a quorum was present. Accordingly, the Chair declared the meeting open. 2 Purpose of meeting The Chair reported that the purpose of the meeting was to consider and, if thought fit, approve: 2.1 the adoption...
Unapproved share option agreement—standalone deed for employee 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...
Dive into our 10 Precedents related to Unapproved share option
What are the implications of granting a non-executive director a share option pursuant to an enterprise management incentives share option scheme? Enterprise management incentives (EMI) share options can only be granted to employees of the relevant company or its qualifying subsidiaries paragraphs 26–27 of Part 4 of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). If a share option was granted to a non-employee (such as a non-executive director (NED)) it will not qualify as a 'Schedule 5 EMI option' and will instead be treated as an unapproved share option and be taxed accordingly. For further details, see Practice Notes: Unapproved share options and Unapproved share options—tax treatment. As regards the EMI qualifying status of the relevant option scheme and any other options granted under that EMI scheme, the grant of a share option to a NED should not impact on the qualifying status of the EMI scheme or the other EMI options unless there was something specific to this effect in...
We want to make new share option grants but our employees are all working from home. Can our share option agreements be executed electronically? The position on this will largely depend upon whether the relevant share option agreements are drafted to be deeds or to be bilateral contracts with consideration. In practice, share options are most often granted by deed in order to make sure that a validly binding contract is made. However, if a deed isn’t used then all the other requirements must be met in order for a binding contract to be made. This includes a need for consideration to paid by the prospective option holder to the grantor of the option in order for the share option to be granted to them. Therefore, typically, if a share option is not being granted by means of a deed then the share option terms will require the employee to make a nominal payment (such as £1) to the company in order for the company to grant...
See the 12 Q&As about Unapproved share option
**Trials are provided to all ÑÇÖÞÉ«ÇéÍø content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these ÑÇÖÞÉ«ÇéÍø services please email customer service via our online form. Free trials are only available to individuals based in the UK, Ireland and selected UK overseas territories and Caribbean countries. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
0330 161 1234