Income Tax (Earnings and Pensions) Act 2003 section 38

Exchange of options on company reorganisation [ITEPA 2003 Sch 3 para 38]

Section 38 deals with how share options held under a Save As You Earn (SAYE) option scheme can be exchanged for new options when a company reorganisation takes place, such as a takeover or court-sanctioned arrangement.

• When a company reorganisation affects the scheme company, participants may release their existing share options in exchange for new options granted by the acquiring company
• A reorganisation includes takeover offers, court-sanctioned compromises or arrangements, non-UK reorganisation arrangements, and compulsory buy-outs of minority shareholders
• Shares already held by the person making the offer, or a connected person, are excluded when determining whether the offer covers all shares or all ordinary share capital
• The agreement to exchange options must be made within six months of the relevant trigger event, or while the acquiring company remains bound or entitled under the compulsory buy-out provisions