Schedule 3 SAYE option schemes: Linkage to savings (arrangement): Changes to prospectus
The savings contract entered into by participants is on the basis of a prospectus (ETASSUM34090). The terms and conditions of a prospectus do not normally change however bonus rates are under constant review in order to reflect market rates. If there is to be a change of bonus rates the current prospectus is withdrawn and a new prospectus issued. This new prospectus will normally take effect 15 days after the notice is issued advising of changed SAYE requirements. Changes in bonus rates may present difficulties in the timing of an invitation as it must be clear from the outset what bonus rates apply to a particular invitation.
When an invitation is issued it will be in accordance with a particular prospectus and the bonus rates specified in that prospectus. In most circumstances the date the contract is entered into is the date of grant unless the rules of the scheme specify a different date or something is done that would have the effect of creating a contract before the grant date, for example acknowledging receipt of an application specifying that an option will be granted.
If a contract is entered into after a prospectus is withdrawn then the contract would normally not be compliant with the statutory requirements for a linked savings arrangement as the rates applicable to the invitation would have been withdrawn. When a notice of withdrawal or variation is issued, HMRC may specify in the notice that certain SAYE contracts made after the date of the notice will not be affected by the change. In practice this will mean that employers may be allowed to accept applications based on the old arrangements provided they are received within 30 days of the date of withdrawal or variation. This would mean that if the variation was a change of bonus rates, the previous bonus rate would apply for applications made on the basis of that rate. If the invitation was based on the new prospectus then the date the contract is entered into must be on or after the date the prospectus comes into effect. If the contract was entered into before this date then it would not be compliant with the statutory requirements for a linked savings arrangement as the new rates would not be in effect on that date.