ETASSUM44220 | Schedule 4 Company Share Option Plan (CSOP): Requirements relating to options: Demergers

Demergers are commonly referred to as ‘exempt distributions’ and can fall within the scope of a ‘reorganisation’ for the purposes of Sections 126-134 TCGA 1992. Schemes which provide for options to be adjusted in the event of a demerger, whether described as such or whether referred to as an exempt distribution or as a reorganisation for the purposes of Sections 126-134 TCGA 1992 would not meet the requirements to qualify as a Schedule 4 CSOP scheme.

It is acceptable, however, for scheme rules to provide for exercise in relation to such an event. Here is an example of a suitable rule for this purpose: -

Demergers and other significant distributions:

If the Committee become aware that the Company is or is expected to be affected by any demerger, dividend in specie, super dividend or other transaction which, in the opinion of the Committee, would affect the current or future value of any Options, the Committee, acting fairly and reasonably may in their discretion, allow some or all Options to be exercised. The Committee shall specify the period in which such Options shall be exercisable and whether such Options shall lapse at the end of the specified period.

The Committee shall notify any Option Holder who is affected by the Committee exercising their discretion under this rule.