Schedule 3 SAYE option schemes: Linkage to Savings (Arrangement): Monthly contributions
The option-holder is required to make 36 monthly contributions, or 60 in the case of a five year contract, under the terms of his savings contract. The aggregate of his 36 (60) monthly contributions (with bonus if appropriate) will equate to the aggregate exercise price of the linked share option granted under the Schedule 3 SAYE option scheme.
Under the current Prospectus each monthly contribution must be between £5 and £500 and a multiple of whole pounds. These limits are set independently from the statutory limits on participation in Schedule 3 SAYE option schemes (paragraph 25).
The fact that a savings contract cannot be taken out for less than £5 per month may cause some practical difficulties in schemes where participants can be granted multiple options at the same time or enter into multiple savings contracts. These difficulties are discussed in more detail at ETASSUM34220.
If employees are paid weekly, the savings body may agree to open a ‘feeder account’ for each employee, into which contributions are paid weekly by deduction from pay, and out of which the required monthly contribution is transferred to the Schedule 3 SAYE contract.
If employees are paid at intervals of 4 weeks, it is acceptable for their 36 (or 60) contributions to be made at those intervals. This means that if the full 36 (or 60) contributions are made, the savings contract will be completed after 144 (or 240) weeks i.e. approximately 3 or 5 months before the normal 3 (or 5) year point. This is the only circumstance in which the Prospectus currently permits payments to be made in advance of their normal monthly due date for payment.
Without a limitation on payments in advance, employees who exercise their options ‘early’ (before the bonus date) would be able to pay up the remainder of their 36 (or 60) contributions in a lump sum, then obtain repayment of all 36 (or 60) contributions, with which to exercise their options in full.