ETASSUM37020 - Schedule 3 SAYE option scheme: Option Notifications: The scheme

A Schedule 3 SAYE option scheme consists of any of the items below that are relevant to meeting the requirements of Parts 2-7 of Schedule 3 ITEPA:

  1. The Schedule 3 SAYE option scheme rules.
  2. The ancillary documents to be used in operating the scheme, i.e. share option application form, invitation letter, deed of grant of options (agreement to grant options for non-UK companies), option certificate and notice of exercise.
  3. The company resolution establishing the scheme and any resolution amending it.
  4. The company’s Articles of Association.
  5. Any side agreements or other documents whatsoever that cover arrangements made between the scheme operators and the scheme participants.

See ETASSUM37080 Alterations.

The scheme organiser

Paragraph 2(2) refers to the ‘scheme organiser’ as the company which established the scheme. This does not mean that this company must grant the options.

Although options may be granted other than by the company which established the scheme, they must be granted under the scheme established by that company (and not by a private arrangement).

Group schemes

Schemes can be extended to include subsidiary companies of which the company which established the scheme has control. These are known as ‘group schemes’. There is no statutory authority for extending a scheme to other companies (CIR v Reed International plc). The scheme organiser company and nominated subsidiaries are referred to as ‘constituent companies’ (paragraph 3(3)).

Details of the constituent companies should be notified in the SAYE annual return. A company’s introduction as a constituent company in a group scheme cannot be backdated to a date before it was formally admitted.

A scheme which is established by a company which is itself a subsidiary company cannot include as constituent companies its own parent company or fellow subsidiaries.

‘Control’ has the meaning given in section 719 ITEPA and will normally include companies in which the grantor owns more than 50% of the shares. It is also acceptable for schemes to define subsidiary companies by reference to Section 1159 of the Companies Act 2006.