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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 4 Company Share Option Plan (CSOP): Shares to be used: Company status

Paragraph 17 is concerned with the ‘status’ of the company whose shares are to be scheme shares. Its purpose is to ensure that the shares used in a Schedule 4 CSOP scheme are shares whose values cannot easily be manipulated.

The scheme shares must be in a company that is not a subsidiary (paragraph 17(b)) (as subsidiary companies provide greatest scope for manipulating share values) except for subsidiaries which are themselves listed on a recognised stock exchange (paragraph 17(a) - see ETASSUM43240).

A subsidiary company which cannot use its own shares as scheme shares in a Schedule 4 CSOP scheme may still be able to use the shares of its parent company, whether or not the parent is listed.