Taxes Consolidation Act 1997 Schedule 12A paragraph 16

Exchange provisions

Paragraph 16 of Schedule 12A sets out the exchange provisions that allow a participant in an approved share option scheme to replace existing rights over shares in a target company with equivalent rights over shares in an acquiring company following a takeover, court-sanctioned arrangement, or compulsory acquisition.

• Where an acquiring company takes over the company whose shares are scheme shares, a participant may release old option rights in exchange for equivalent new rights over shares in the acquiring company or a related company
• The exchange must take place within an appropriate period, generally six months from the date control is obtained or the court sanctions the arrangement, or for as long as the acquiring company remains bound or entitled to acquire shares
• The new rights must satisfy the same qualifying conditions as the old rights, be exercisable in the same manner, and the market value and total subscription price of the new shares must equal those of the old shares
• For the purposes of section 519A and the Schedule, the new rights are treated as having been granted at the same time as the original old rights