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EMI

Takeovers

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Can someone please put the words of section 534(2) of ITEPA 2003 into plain English, ie explain the circumstances in which it might apply.

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By The Dullard
14th Feb 2020 13:23

The way I read it, 534(1)(a) and (b) aren't disqualifying events if you replace the option in accordance with paras 41 and 42 of Schedule 5. I think that's what it's getting at.

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Replying to The Dullard:
Psycho
By Wilson Philips
14th Feb 2020 13:46

Not really the answer I was looking for, but thanks for trying.

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Replying to Wilson Philips:
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By The Dullard
14th Feb 2020 13:58

You sound disappointed with my plain English.

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Replying to The Dullard:
Psycho
By Wilson Philips
14th Feb 2020 18:22

Not so much the plain English but lack of an example as to where the legislation might apply.

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By Pukka
14th Feb 2020 16:15

I read it as:
Employee has EMI option in Co A
Co A becomes a sub of Co B (either from 3rd party purchase or reorganisation) & therefore s534(1) relevant
But Employee receives replacement EMI option in Co B
'New'/replacement EMI option has to meet the necessary requirements
HMRC give requirements in ETASSUM55030.

Hopefully that's what you were looking for?

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Replying to Pukka:
Psycho
By Wilson Philips
14th Feb 2020 18:20

Not exactly.

If A becomes sub of B a replacement option needs to be granted (or the existing one exercised). The legislation in question then seems to contemplate a further disqualifying takeover event, eg B becomes sub of C. (The first event that triggers the start of the replacement period can’t be the same event that happens during that period.)

So surely such a subsequent event should only have a potential impact on the replacement option and not the old option?

Clearly the legislation must have some intended purpose but I can’t see it.

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