ETASSUM42320 - Schedule 4 Company Share Option Plan (CSOP): Eligibility of individuals to participate: The 'no material interest' requirement: Close companies

The 鈥榠nterests鈥� in shares which have to be tested to see whether they are material are interests in shares in a 鈥榗lose company鈥� which:

  • is the company whose shares are used in the Schedule 4 CSOP scheme (the 鈥榮cheme share鈥� company), or
  • controls the 鈥榮cheme share鈥� company, or
  • is a member of a consortium which owns the 鈥榮cheme share鈥� company (in this situation the 鈥榮cheme share鈥� company might not itself be close).

The basic test is whether the company is under the control of:

  • 5 or fewer participators (i.e. shareholders), or
  • under the control of participators who are directors of the company.

The relevant provisions are in Chapter 2 of Part 10 CTA 2010 (Section 442(a) and Sections 446/447 CTA 2010 being disregarded for the purposes of the CSOP code).

If a company is not close when options are to be granted, but was close earlier in the preceding 12 months, no person who held a material interest at the earlier time may be granted an option (or may exercise an existing option) until 12 months have passed since the company ceased to be close.