Taxes Consolidation Act 1997 Schedule 12A, paragraph 15

Two or more classes of ordinary share capital

Paragraph 15 of Schedule 12A requires that, where a company whose shares are used in an approved share option scheme has more than one class of ordinary share capital, the majority of issued shares of the relevant class must be held by outside shareholders rather than by insiders connected with the scheme.

• This rule applies only where the company whose shares are scheme shares has two or more classes of ordinary share capital.
• The majority of issued shares of the same class as the scheme shares must be held by persons who are not directors or employees (or their trustees) who acquired shares through rights or opportunities linked to their employment rather than through a public offer.
• Where the company is controlled by a quoted company that is not a close company, shares held by companies that control the scheme company or are its associates are also excluded from the qualifying majority.
• The purpose of the rule is to ensure that scheme shares of the relevant class are genuinely widely held and not concentrated among insiders.