Income Tax (Earnings and Pensions) Act 2003 Schedule 4 paragraph 25A

Exercise of options: company events

Schedule 4 paragraph 25A sets out when CSOP share options may be exercised early in response to corporate events such as takeovers, court-sanctioned compromises or arrangements, non-UK reorganisations, and compulsory buy-out procedures.

• A CSOP scheme may allow share options to be exercised within six months of a takeover, court-sanctioned compromise or arrangement, or a binding non-UK company reorganisation affecting the relevant shares.
• Options may also be exercised at any time when a person is bound or entitled to acquire shares under the compulsory buy-out provisions of the Companies Act 2006.
• Where a corporate event causes the underlying shares to cease meeting the scheme's share requirements, there is a 20-day grace period in which options may still be exercised, provided this falls within the overall permitted exercise window.
• Options exercised up to 20 days before the corporate event in anticipation of it are treated as validly exercised, but if the event does not occur within 20 days of exercise, the exercise is treated as having had no effect.