Income Tax (Earnings and Pensions) Act 2003 section 21A

General requirements as to terms of option [ITEPA 2003 Sch 4 para 21A]

Section 21A sets out the key terms that must be stated when a share option is granted under a Company Share Option Plan (CSOP) scheme, and the rules governing how those terms may subsequently be varied.

• Five key terms must be stated at the time an option is granted: the exercise price, the number and description of shares, any restrictions on the shares, the exercise windows, and the lapse or cancellation conditions.
• After grant, the exercise price may only be varied in accordance with paragraph 22; the number or description of shares may be varied under paragraph 22 or through a pre-stated mechanism; and all other terms may only be varied through a pre-stated mechanism.
• Any variation mechanism that was stated at the time of grant must be applied in a way that is fair and reasonable.
• All stated terms and any variation mechanisms must be notified to the option holder as soon as practicable after the option is granted.