Taxes Consolidation Act 1997 Schedule 12C

Approved share option schemes

Schedule 12C set out the detailed conditions that a share option scheme had to satisfy to obtain Revenue approval under section 519D. The Schedule is spent from 24 November 2010 by virtue of section 10(b) of the Finance Act 2011.

• Revenue would approve a scheme only where it was open to all eligible employees and full-time directors on similar terms, although up to 30 per cent of shares granted in a year could be reserved for "key employees or directors" whose skills or experience were certified as vital to the company.
• Participants had to be chargeable to tax under Schedule E, had to have served a qualifying period of up to three years, and could not hold (or have held in the previous 12 months) a material interest of 15 per cent or more in a close company whose shares could be acquired under the scheme.
• Scheme shares had to form part of the ordinary share capital of the grantor, a controlling company or a consortium company, be fully paid, non-redeemable, and free of restrictions other than those permitted by the Schedule.
• The option price had to be at least the market value of the shares at grant, rights were non-transferable (except to a personal representative on death), and takeover exchange provisions allowed the release of old rights in return for equivalent rights over shares in the acquiring group.