Section 174 | Company A's proportion if option arrangements in place

(1)If this section applies, take the following steps.

Step 1Identify all option rights under the option arrangements (or sets of arrangements if more than one) which exist at the relevant time but which have not become effective at or before that time.“Option rights” means rights of the kind mentioned in section 173(4)(a) or (b), and such a right becomes “effective” when the shares or securities to which it relates are acquired as a result of its exercise.

Step 2Identify each possible state of affairs that could subsist at the relevant time if the option rights identified at Step 1, or any of them or any combination of them, became effective at that time. For this purpose it does not matter if an option right cannot actually become effective at or before the relevant time.

Step 3Take each state of affairs identified at Step 2 and—

(a)identify what the rights and duties of the participating equity holders would be at the relevant time if the state of affairs were to subsist at that time, and

(b)determine what company A's proportion would be if those rights and duties were the rights and duties of the participating equity holders at the relevant time.

Step 4Identify the lowest proportion determined under paragraph (b) of Step 3. That proportion is referred to as “the alternative proportion”.

(2)If the alternative proportion is less than what company A's proportion would be ignoring this section, then company A's proportion is taken to be the alternative proportion.

(3)Subsection (2) is subject to sections 176 to 178 and 180.