Income Tax (Earnings and Pensions) Act 2003 section 421H

Meaning of "employee-controlled" etc.

Section 421H defines when a company is considered "employee-controlled" for the purposes of the employment-related securities rules in Chapters 2 to 4.

• A company is "employee-controlled" by virtue of a class of shares if the majority of that class (excluding shares held by or for an associated company) are held by or for the benefit of employees of the company or a company it controls.
• Those employees must, as shareholders, be collectively able to control the company.
• The definition of "employee" is broad and includes anyone who is to be, currently is, or has been an employee.
• The term "associated company" takes its meaning from section 449 of the Corporation Tax Act 2010.