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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 4 Company Share Option Plan (CSOP): Exchange of share options: Agreement of the acquiring company

Scheme rules should be drafted to make it clear that the implementation of the rollover provisions is subject to the agreement of the acquiring company. This is a requirement of paragraph 26(1). Rules which provide that such agreement is not necessary if the options are over existing shares would not meet the requirements to qualify as a Schedule 4 CSOP scheme.

Selective rollover (permitting only some option-holders to exchange their options) in Schedule 4 CSOP schemes, is acceptable if that is all the acquiring company consents to.

Partial rollover (with the balance being exercised or surrendered) is acceptable in Schedule 4 CSOP schemes if the scheme rules permit it. Companies may, however, wish to make it clear in their rules that exercise or rollover are alternatives that will apply at the time of a takeover.

Cash paid in return for the partial surrender of options is not an acceptable feature of a Schedule 4 CSOP scheme, in line with cash cancellation offers generally (see ETASSUM41150).