Income Tax (Earnings and Pensions) Act 2003 section 65

General requirements as to dividend shares

Section 65 sets out the requirements that dividend shares acquired under a Share Incentive Plan must meet, including rules on share type, forfeiture, and any compulsory sale provisions.

• Dividend shares must be of the same company, same class, and carry the same rights as the shares on which the dividend was paid.
• Dividend shares must not be subject to any forfeiture provisions.
• Despite the no-forfeiture rule, dividend shares may be subject to compulsory sale provisions, but only if minimum price conditions are met.
• The sale price must be at least equal to the cash dividends used to acquire the shares, or the market value at the time of sale if that is lower.