Income Tax (Earnings and Pensions) Act 2003 section 39

Requirements about share options granted in exchange

Section 39 sets out the detailed requirements that must be met when share options are exchanged for new ones during a company reorganisation under a Save As You Earn (SAYE) share option scheme.

• New share options must relate to shares in a different company from the original, being either the acquiring company or a company that controls or is connected via a consortium to the scheme organiser
• The new options must be equivalent to the old ones: exercisable in the same manner, subject to the same scheme rules, and with substantially the same total market value and total exercise cost
• For SAYE purposes, new options are treated as having been granted at the same time as the original old options they replace
• Market value of shares must be determined ignoring any restrictions on the shares and using a methodology agreed with HMRC