Income Tax (Earnings and Pensions) Act 2003 section 28

Shares must be fully paid up and not redeemable

Section 28 sets out the requirements that shares used in a share incentive plan must be fully paid up and not redeemable, with a specific exemption for registered co-operative societies.

• Eligible shares must be fully paid up, meaning there can be no outstanding undertaking to pay cash to the company at a future date.
• Eligible shares must not be redeemable, and this includes shares that could become redeemable at any point in the future.
• The restriction on redeemable shares does not apply to shares in a registered co-operative society.
• A registered co-operative society includes societies registered under the Co-operative and Community Benefit Societies Act 2014, equivalent Northern Ireland legislation, and European Cooperative Societies formed under the relevant EU regulation.