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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

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HM Revenue & Customs
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Schedule 3 SAYE option schemes: Linkage to Savings (Arrangement): Foreign currency shares

The subscription price of the shares may be denominated in sterling or in the foreign currency in which the shares are most actively traded.

Where the subscription price is denominated in sterling no particular difficulties arise. The option will be over the largest whole number of shares which can be bought at the subscription price with the expected repayment under the related savings contract. This number of shares will remain fixed.

Denomination of the subscription price in foreign currency is more complicated. The option-holder must be able to buy the largest whole number of shares which can be bought at the foreign currency subscription price with the proceeds of the savings contract (paragraph 25(1)). This means converting the savings repayment into the appropriate foreign currency at the relevant exchange rate at the date of repayment / exercise. The number of shares which can be bought with the savings repayment will therefore not be determined finally until then.

It may be accepted that an option granted over foreign currency shares, the number of which is variable and not capable of determination until savings repayments are obtained (whether on maturity of the savings contract or earlier if there is a right of early exercise), does give the option-holder a “right to acquire shares”, as required by paragraph 2.

It is not acceptable to grant options over a fixed number of foreign currency shares, based on the rate of exchange at the time the option was granted. If the exchange rate at the date of exercise is:

  • less favourable than at grant, cash cannot be added to the repayment to enable the “rights” to be exercised in full (paragraph 24(1)),
  • more favourable than at grant, so that the savings repayment exceeds the aggregate exercise price of the fixed number of shares, taking the surplus repayment in cash would not satisfy paragraph 25. Nor is it possible for further shares to be acquired with the surplus savings repayment.