CTM81090 - Groups & consortia: groups - entitlement to profits or assets available for distribution: option arrangements

CTA10/S173 and S174

The J Sainsbury decision mentioned in CTM81085 established that arrangements affecting the ownership of shares were not within CTA10/S171. CTA10/S174 brought such arrangements within Part 5 Chapter 6. The provision refers to arrangements affecting the ownership of shares as 鈥榦ption arrangements鈥�.

It ensures that, if at any time in the relevant accounting period (CTM81005) 鈥榦ption arrangements鈥� exist, the rights and obligations of the equity holders are calculated as though 鈥榦ption rights鈥� became effective at that time (CTM81095).

Option arrangements

鈥極ption arrangements鈥� mean arrangements of any kind, whether or not in writing,

  • by virtue of which there could be a variation in the percentage entitlements of any of the equity holders in a company to profits or assets in a winding-up, and

  • which could result from the exercise of option rights.Option rights

    鈥極ption rights鈥� means:

  • rights to acquire shares or securities in the company, or

  • rights to require a person to acquire shares or securities in the company.For the purpose of option rights, shares or securities:

  • exclude restricted preference shares and normal commercial loans (CTM81010),
  • include any other shares or securities in the company whether or not issued before the arrangements came into existence.