ETASSUM44450 - Schedule 4 Company Share Option Plan (CSOP): Requirements relating to options: Scheme of arrangement

A scheme of arrangement is a common means for effecting a change of control, and it may arise even after a general offer has been made.

The right to exercise an option will normally arise after the change of control has occurred, unless there is a “conditional exercise” (see ETASSUM44410) or after the court has authorised the arrangement, so the status of the shares acquired may impact on whether or not the scheme remains tax advantaged. In the circumstances of a “scheme or arrangement” change of control will not occur until the court sanctions the arrangement so there will be a short period between the court authorising the arrangement and the court sanctioning it. It is important therefore that the scheme rules are clear as to when exercise is allowed. It is acceptable for scheme rules to allow for exercise between these two dates with the option lapsing once the arrangement receives court sanction. The right to exercise may be subject to discretion with the usual provisos.