Company Share Option Plan (CSOP): outline
Company Share Option Plans (CSOP) are a popular type of approved share scheme. The relevant legislation is now in Chapter 8 Part 7 and Schedule 4 ITEPA03 and in Part 3 Schedule 7D TCGA92.
A company that is operating such a scheme may grant options over shares to any of its employees or to any of its full-time directors. The shares may be the shares of the employing company or of a company by which it is controlled; the scheme rules state which shares can be used in the scheme. Schemes can be extended to include subsidiary companies under the control of the company which established the scheme. These are known as “group schemes”.
There is no requirement that all employees should be offered shares under schemes of this type, and they are often used to provide additional incentives to key employees. For this reason, the schemes are sometimes known as `executive’, or `discretionary’, share option schemes.
Under the scheme there is a limit on the value of shares over which an employee may hold options and options may not be granted to acquire shares at manifestly less than the market value at the time the option was granted. Options granted over the limit or discounted options fall outside the scheme and are treated in the same way as options under unapproved schemes, see CG56370+.
For more detail see ESSUM40100+ and ERSM301100+.
Any questions about whether options are granted under approved schemes should be referred to Specialist Personal Tax, Employee Shares & Securities Unit, Nottingham Team, 1st Floor, Ferrers House, Castle Meadow Road, Nottingham NG2 1BB.