Put option Definition

GLOSSARY

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What does Put option mean?

A put option gives the buyer the right (but not the obligation) to sell an asset on (and sometimes before) a given date at a price agreed today. The seller (writer) of the option has the obligation to buy the underlying asset at that price if the option is exercised.

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Ramsay case law—chronology and cheat sheet

Ramsay case law—chronology and cheat sheet The following table lists, in reverse chronological order, cases that have been important in the development of the Ramsay anti-avoidance principle. It is not a list of every case that has discussed the principle. It is weighted towards the present in the sense that decisions of lower courts are more likely to feature in the list if they are relatively recent, and so demonstrate the latest judicial thinking. For a general introduction to the Ramsay principle, see Practice Note: Ramsay as a guide to statutory construction. For comprehensive tax case tracking across current (and recently completed) tax cases, see the: Tax—cases tracker. Case name and citation Who won in the highest court? Facts in a nutshell Quote(s) from the judgment Comment Michael Brown, Bridget Brown [2024] EWCA Civ 92 The government (in the Court of Appeal) Scheme for avoiding SDLT ‘...no statute is immune from a purposive interpretation, and the very mistake that this court made in Rossendale was to...

Checklist of factors which may (and may not) fracture the class in a scheme of arrangement or restructuring plan

Checklist of factors which may (and may not) fracture the class in a scheme of arrangement or restructuring plan The below tables provide an overview of: (i) various factors that do not create separate classes (ie do not fracture the class) and (ii) various factors that have been considered to create separate classes (ie fracture the class) in Part 26 scheme and Part 26A restructuring plan cases. Judges have found that the caselaw relating to schemes is equally applicable to restructuring plans on many issues (see Re PizzaExpress (convening) and Re Virgin Atlantic), including class formation. However, the Court of Appeal in Adler confirms that cross-class cramdown (CCCD) in restructuring plans does require different considerations (though note that leave to appeal to the Supreme Court has been granted); see Practice Note: Cross-Class Cram Down under a Part 26A restructuring plan. As a word of caution, it is important to recognise that the class analysis is very fact-specific and it is possible that another judge, faced with a...

Warrants

Warrants What are warrants? A warrant is a tradeable security which gives the holder the right, but not the obligation, to: • buy or sell • a specified asset (the underlying asset or, simply, underlying) • at a specified price (the exercise price or strike price) • on a specified date or dates (the exercise date(s)) A warrant is a kind of derivative—it derives its value from the underlying asset and is a way of obtaining exposure to the value of the underlying asset without owning it. Warrants are sometimes described as 'securitised derivatives'—ie derivatives in the form of securities. A warrant is not a debt security and therefore does not have a principal amount, contains no covenant to repay and does not bear interest. Types of warrants Equity warrants Equity warrants entitle the holder to subscribe in cash for a specified number of newly issued shares of the issuer of the warrants at a specified price. They usually: • are attached upon issue to debt instruments (bonds)...

Resolving derivatives disputes—key cases

Resolving derivatives disputes—key cases This Practice Note sets out certain key cases and associated analysis that is relevant to derivatives lawyers. The cases are divided by topic area and include: • Derivatives cases relating to capacity to enter into transactions • Derivatives cases relating to classification of swaps • Derivatives cases relating to wagering or gaming • Derivatives cases relating to constructing ISDA master agreements • Derivatives cases relating to payments and close-out amounts • Derivatives cases relating to disputes on jurisdiction • Derivatives cases relating to the mis-selling of derivatives or LIBOR manipulation • Derivatives cases relating to tax issues, and • Derivatives cases relating to regulatory issues Derivatives cases relating to capacity to enter into transactions Names of parties Judgment date Case summary Relevant analysis and articles UniCredit SpA v EUR SpA CL-2021–000263, Commercial Court, King’s Bench Division of the High Court of Justice of England and Wales European bank UniCredit has sued an Italian publicly owned asset manager in London to enforce the terms of an...

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Put and call option agreement

Put and call option agreement This Agreement is made [as a deed] on [insert date] Parties 1 [insert name of buyer] [incorporated and registered in [insert place of incorporation] under number [insert company number] whose registered office is at [insert address] OR of [insert address]] (the Buyer); and 2 [insert name of seller] [incorporated and registered in [insert place of incorporation ] under number [insert company number] whose registered office is at [insert address] OR of [insert address]] (the Seller). background: (A) The Seller has full legal and beneficial ownership of the Option Shares. (B) The Seller and Buyer have agreed to enter into a put and call option on the terms, conditions and provisions of this agreement. (C) [The parties intend to execute this agreement as a deed.] It is agreed as follows: 1 Definitions 1.1 In this agreement the following expressions shall have the following meanings: Articles • means the articles of association of the Company from time to time;...

Cross-option agreement

Cross-option agreement This Agreement is made on [insert day and month] 20[insert year] Parties 1 [Insert name of shareholder] of [insert address]; 2 [Insert name of shareholder] of [insert address]; 3 [Insert name of shareholder] of [insert address]; and 4 [Insert name of shareholder] of [insert address]; (each a party and together, the parties). background: (A) Together, the parties are the legal and beneficial owners of the entire issued share capital of the Company (as defined below). (B) Each Shareholder (as defined below) has agreed to make provision for the transfer of the legal and beneficial ownership of their shares in the Company in the event of their death on the terms of this agreement. The parties agree: 1 Definitions and interpretation 1.1 In this agreement: Business Day • means a day, other than a Saturday, Sunday or public holiday, on which clearing banks are open for non-automated commercial business in the City of London; Call Option • means an option granted pursuant to clause...

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What are the risks faced by the grantee of an option over land in Scotland and how can these be mitigated?

What are the risks faced by the grantee of an option over land in Scotland and how can these be mitigated? Reference is often made to ‘put’ option agreements and ‘call’ option agreements. A call option agreement is one where the buyer (grantee) can call upon the seller (grantor) to sell a property (or part of it) to the grantee. A put option is one in which the landowner can call upon the grantee to purchaser the property, see Practice Note: Options to purchase property—Scotland. When an option over land is granted, the grantee has a contractual right to exercise the powers conferred to them by the option agreement. These powers most commonly involve the right to purchase the land: • at a particular point in time, or • within a certain time-frame at • a price, or • a pricing strategy (such as the market value of the land at the time of purchase) determined at the time the option was agreed. ...

If a company has a put option which, when exercised, will require a third party to accept an allotment of its shares and the third party does not have an equivalent call option, when must the statutory pre-emption rights be excluded or disapplied in relation to that proposed allotment?

If a company has a put option which, when exercised, will require a third party to accept an allotment of its shares and the third party does not have an equivalent call option, when must the statutory pre-emption rights be excluded or disapplied in relation to that proposed allotment? Section 549(1) of the Companies Act 2006 (CA 2006) provides that the directors of a company must not exercise any power of the company to allot shares or grant rights to subscribe for, or to convert any security into, such shares, except in accordance with CA 2006, s 550 (private company with single class of shares) or CA 2006, s 551 (authorisation by company). This Q&A considers a scenario where the company in question will, when the put option is exercised, be seeking to allot shares in accordance with CA 2006, s 551. Under CA 2006, s 551(1), the directors of a company may exercise a power of that company to allot shares or grant rights to...

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Share Incentives weekly highlights—3 October 2024

This week's edition of Share Incentives weekly highlights includes a new Q&A which considers how to include a put option in a growth share structure and the associated tax considerations when doing so.

Court of Appeal applies Ramsay principle to overturn Upper Tribunal decision in ‘magic’ capital allowances tax scheme (HMRC v Altrad Services Ltd and Robert Wiseman and Sons Ltd)

Tax analysis: In HMRC v Altrad Services Ltd and Robert Wiseman and Sons Ltd, the Court of Appeal held that, on a purposive construction of the legislation, a tax scheme intended to generate additional capital allowances was ineffective as the taxpayers did not ‘cease to own assets’ (within the meaning of section 61(1)(a) of the Capital Allowances Act 2001 (CA 2001)).

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