188ÌåÓý

The intention of paragraphs 18- 20 and 22 is that the shares acquired through Schedule 3 SAYE option schemes should be normal shares on normal terms (see ETASSUM33170). The purpose of paragraph 22 is to ensure that:

• if the company whose shares are to be used in the tax advantaged share scheme has more than one class of ordinary share capital,
• the scheme shares are not second-class shares of a class specially created for employees, but are shares ‘worth havingâ€�.

For companies with more than one class of shares paragraph 22(1) sets two tests, either of which, if satisfied, will provide a useful indication that the scheme shares are of a class ‘worth having�:

• either the shares will be worth having because they are ‘employee-controlâ€� shares which give the employees and directors (and ex-employees and ex-directors) control of the company (the employee-control test),
• or the shares will be worth having because the majority of the shares of that class are ‘open market sharesâ€� held by ‘outsidersâ€� (i.e. non-employees and non-directors) who were presumably prepared to pay good money for them (the open market test).

It will usually be clear from the Articles of Association whether a company has more than one class of shares. Deferred and ordinary shares constitute separate classes of share. Convertible preference shares constitute a separate class to the ordinary shares to which they may be converted, until conversion takes place.