ETASSUM28110 - Schedule 2 share incentive plan (SIP): Supplementary and defined terms: Jointly owned companies

Paragraph 91 allows a Schedule 2 SIP which is a group plan (see ETASSUM20120) to be extended to include companies which are jointly-owned by the company and any company controlled by that jointly-owned company (JOC).

A JOC is one that is not controlled by any one person and 50% of the issued share capital is owned by one person and 50% by another. The conditions for this are that no JOC or any company controlled by that company may be a constituent company in more than one group plan nor may the JOC (or one of its subsidiaries) be a constituent company of a group plan if one of those companies (the JOC and its subsidiaries) is a constituent of another group plan.  

For the purposes of determining 'control' each joint owner of a JOC is regarded as controlling every JOC and any company controlled by that company. 

For example:

  • both Company A & Company B each own 50% of the issued share capital of Company C
  • Company C owns 100% of the issued share capital of Company X, Company Y & Company Z
  • both Company A & Company B have Schedule 2 SIPs with provisions allowing for participation of jointly owned companies
  • if employees of Company C participate in Company A’s Schedule 2 SIP, then only Company A could make further awards to employees of Company C or any of its subsidiary companies
  • if Company B had previously made awards to employees of Company C or of one of its subsidiary companies then those companies could not be constituent companies in Company A’s Schedule 2 SIP – their employees would be prevented from participating in Company A’s awards

For a visual representation of this refer to the jointly-owned company example diagram.

This only applies for the purposes of determining whether the JOC and its subsidiaries may participate in a group plan; a JOC is not regarded as under the control of either joint-owner for the purposes of determining whether the JOC or one of its subsidiaries may establish a Schedule 2 SIP (see ETASSUM23140).