Corporation Tax Act 2010 section 173

Cases in which option arrangements are in place

Section 173 defines what constitutes an "option arrangement" for the purposes of the consortium relief rules, setting out two conditions that must both be met and specifying certain excluded rights.

• An option arrangement exists when an arrangement can change an equity holder's beneficial entitlement to distributions of profits or assets (Condition A) and that change can result from exercising rights to acquire or require another to acquire ordinary shares or securities in the company (Condition B).
• It does not matter whether the shares or securities in question were issued before or after the arrangement was established.
• Rights acquired through employment under an approved SAYE option scheme or an approved CSOP scheme are excluded from the definition of option arrangement.
• Rights to acquire normal commercial loans are also excluded, and only ordinary shares (not restricted preference shares) are within scope.