Section 421D | Replacement and additional securities and changes in interests ^F1

(1)Subsections (2) and (3) apply where an associated person is entitled to employment-related securities (the “original securities”) and either—

(a)as a result of the conversion of the original securities (or the securities in which they are an interest), or of any other transaction or series of transactions, that person ceases to be entitled to the original securities but that person or another associated person acquires securities or an interest in securities (the “replacement securities”), or

(b)by virtue of that person being entitled to the original securities, that person or another associated person acquires other securities or an interest in other securities (the “additional securities”).

(2)The replacement securities or the additional securities are to be regarded for the purposes of section 421B(1) (securities acquired pursuant to a right or opportunity available by reason of an employment) as acquired pursuant to the same right or opportunity as the original securities.

(3)Where the market value of the original securities is reduced by reason of the issue of, or of securities including, the replacement securities or the additional securities (or the securities in which they are an interest), the amount of that reduction is to be treated for the purposes of Chapters 2 and 3 as consideration or additional consideration given for the acquisition of the replacement securities or the additional securities and for the purposes of Chapter 3C as a payment made for their acquisition at or before the time of the acquisition.^F2

(4)Subsections (2) and (3) apply whether or not the replacement securities, or the additional securities, were acquired for consideration or a payment was made for their acquisition at or before the time of the acquisition.^F3

(5)Where Chapters 2 to 4A apply to an interest in securities, an increase of that interest is to be treated for the purposes of section 421B(1) (securities acquired pursuant to a right or opportunity available by reason of an employment) as a separate interest acquired pursuant to the same right or opportunity as the original interest.^F4

(6)Where Chapters 2 to 4A apply to an interest in securities, a reduction of that interest (otherwise than by a disposal to an associated person) is to be treated for the purposes of those Chapters as the disposal otherwise than to an associated person of a separate interest proportionate to the reduction.^F5