Income Tax (Earnings and Pensions) Act 2003 section 536

Other disqualifying events

Section 536 lists the additional events that can cause an Enterprise Management Incentives (EMI) share option to lose its qualifying status, beyond the disqualifying events covered elsewhere in the legislation.

• Varying the terms of an EMI option so as to increase the market value of the shares under option, or so that the option no longer meets the Schedule 5 requirements, is a disqualifying event.
• Alterations to the company's share capital that affect share values through changes to rights or restrictions can disqualify the option — either because the Schedule 5 requirements are no longer met, or because the alteration was designed to increase share values.
• Converting option shares into a different class of shares is a disqualifying event, unless the conversion falls within a specific exclusion in section 538(2).
• Granting the employee a Company Share Option Plan (CSOP) option is a disqualifying event if, immediately afterwards, the employee holds unexercised options over shares with a total value exceeding £250,000.