Schedule 2 share incentive plan (SIP): Types of award: Partnership shares: Partnership share agreements
Qualifying employee’s who wish to participate in the award of partnership shares under a Schedule 2 SIP, are required to enter into a partnership share agreement (PSA) (paragraph 44(1)). A PSA is an agreement with the company which established the Schedule 2 SIP under which:
- the employee authorises his or her employer to deduct money from his salary (see ETASSUM24330) for the purchase of partnership shares, and
- the company undertakes to arrange for partnership shares to be purchased for that employee in accordance with the plan (paragraph 44) (see ETASSUM24370).
The PSA must specify the amount of the deductions from wages or salary and the interval, which might be weekly, monthly, or some other interval. If the company is offering participation on the basis of a ‘one-off’ deduction, the PSA must specify the month in which the deduction will be made. The amount to be deducted can be stated as a percentage of the employee’s salary (as defined for the purposes of paragraph 43(4) – see ETASSUM24330) (paragraph 45(4)).
Part 6 of Schedule 2 specifies certain other information which PSAs must contain. These requirements are covered elsewhere in this manual under the relevant headings. Also within this guidance is a specimen example PSA - ETASSUM28240, along with other specimen documents.
Withdrawing from a PSA
A Schedule 2 SIP must allow an employee to withdraw from the partnership share agreement at any time by giving notice in writing to the company. Unless a later date is specified in the notice, the withdrawal takes effect 30 days after it is received. Any partnership share money held on the employee’s behalf must be repaid to him as soon as practicable (paragraph 55).