Income Tax (Earnings and Pensions) Act 2003 Schedule 2 paragraph 33

Permitted restrictions: pre-emption conditions

Paragraph 33 sets out the rules under which a Share Incentive Plan (SIP) may require employees to offer their shares back to the company or other shareholders before selling them on the open market, known as pre-emption conditions.

• A SIP may include pre-emption conditions requiring participants to offer their shares for sale to specified persons before selling them elsewhere, but only if the company's articles of association impose similar restrictions on all shares of the same class.
• Pre-emption conditions in a SIP must not require shares to be sold at a price below their market value at the time of the offer.
• These pre-emption requirements apply equally to free shares, partnership shares, matching shares, and dividend shares held within the plan.
• Pre-emption conditions are one of the permitted restrictions that a SIP may impose on shares without breaching the general rule that SIP shares must not be subject to restrictions beyond those applying to all shares of the same class.

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