Textual Amendments
F1Pt. 7 heading substituted (with effect in accordance with Sch. 22 para. 2(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 2(1)
Modifications etc. (not altering text)
C1Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)
Textual Amendments
F2Pt. 7 Ch. 2 substituted (1.9.2003 with effect in accordance with Sch. 22 para. 3(2)-(4) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 3(1); S.I. 2003/1997, art. 2
This Chapter applies to employment-related securities if they are—
(a)restricted securities, or
(b)a restricted interest in securities,
at the time of the acquisition.
Modifications etc. (not altering text)
C2S. 422 modified (with application in accordance with Sch. 2 para. 4(4) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 4(4)
(1)For the purposes of this Chapter employment-related securities are restricted securities or a restricted interest in securities if—
(a)there is any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies, and
(b)the market value of the employment-related securities is less than it would be but for that provision.
(2)This subsection applies to provision under which—
(a)there will be a transfer, reversion or forfeiture of the employment-related securities, or (if the employment-related securities are an interest in securities) of the interest or the securities, if certain circumstances arise or do not arise,
(b)as a result of the transfer, reversion or forfeiture the person by whom the employment-related securities are held will cease to be beneficially entitled to the employment-related securities, and
(c)that person will not be entitled on the transfer, reversion or forfeiture to receive in respect of the employment-related securities an amount of at least their market value (determined as if there were no provision for transfer, reversion or forfeiture) at the time of the transfer, reversion or forfeiture.
(3)This subsection applies to provision under which there is a restriction on—
(a)the freedom of the person by whom the employment-related securities are held to dispose of the employment-related securities or proceeds of their sale,
(b)the right of that person to retain the employment-related securities or proceeds of their sale, or
(c)any other right conferred by the employment-related securities,
(not being provision to which subsection (2) applies).
(4)This subsection applies to provision under which the disposal or retention of the employment-related securities, or the exercise of a right conferred by the employment-related securities, may result in a disadvantage to—
(a)the person by whom the employment-related securities are held,
(b)the employee (if not the person by whom they are held), or
(c)any person connected with the person by whom they are held or with the employee,
(not being provision to which subsection (2) or (3) applies).
[F3(1) Employment-related securities are not restricted securities or a restricted interest in securities by reason only that any one or more of the following is the case—
(a)the employment-related securities (or the securities in which they are an interest) are unpaid or partly paid shares which may be forfeited for non-payment of calls and there is no restriction on the meeting of calls by the person by whom they are held, [F4or]
(b)that person may be required to offer for sale or transfer the employment-related securities on the employee ceasing, as a result of misconduct, to be employed by the employer or a person connected with the employer, or
F5(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
[F6(2)Subsection (1) does not apply if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions.]]
Textual Amendments
F3S. 424 renumbered as s. 424(1) (with effect in accordance with Sch. 2 para. 4(4) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 4(1)
F4Word in s. 424(1)(a) inserted (with effect in accordance with Sch. 2 para. 4(4) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 4(2)(a)
F5S. 424(1)(c) repealed (with effect in accordance with Sch. 2 para. 4(4) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 4(2)(b), Sch. 11 Pt. 2(1)
F6S. 424(2) inserted (with effect in accordance with Sch. 2 para. 4(4) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 4(3)