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Effect of company takeover on existing share scheme

Produced by Tolley in association with
Employment Tax
Guidance

Effect of company takeover on existing share scheme

Produced by Tolley in association with
Employment Tax
Guidance
imgtext

Brief overview

If a company (usually referred to as the target) is taken over, any employee or director holding options, share awards or other rights over securities in that company will be concerned about what will happen to their awards. Generally, the plan rules and/or award agreements will set out what will happen in specific circumstances to ensure the participants, the Target and the acquirer of the company (the “Acquirerâ€) have comfort about what their rights and responsibilities are. The plan rules may also offer additional choices.

It is common that in takeover situations, plan rules will allow participants the chance to acquire shares in the Target (or where shares have already been acquired, the restrictions may fall away) to the extent that the options or awards have vested. Participants may then be offered the right to sell the shares in Target for cash, shares in the Acquirer or a combination of the two. Alternatively they may have the chance to exchange their options or share rights for equivalent options

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Ken Moody
Ken Moody

Tax Consultant at KM Tax Consultant 


Ken Moody CTA (Fellow), ATT has worked in tax for over 40 years. He qualified as an Associate of the Chartered Institute of Taxation (CIOT) while working for a local firm of Chartered Accountants in his home town Sheffield. Ken then joined a top 30 London firm, managing the tax affairs of a SE-quoted group of companies. As lead tax adviser, this involved complex technical negotiations with HMRC, briefing and meeting with Tax Counsel, group tax planning and advice on corporate transactions. Following a takeover, Ken took on a similar role in Saffery Champness' London office.Since 1995, Ken has worked for firms in the North of England and Scotland, in mainly advisory roles, focussing on the holistic tax affairs of owner-managed businesses (OMBs) and their proprietors. Ken now works as an independent tax consultant advising a number of professional firms of accountants around the North West, where he is based, but also offering nationwide support. Still with an OMB focus, Ken advises across a broad range of UK direct tax issues.Ken's writing career began with articles in Taxation and Tax Journal from about 2000 onwards and in writing in-house tax publications for DTE in Bury, as part of his role as Senior Tax Manager. He has since written numerous articles for professional magazines and other publications. Ken was awarded the Fellowship of the CIOT in 2011 for his work "Employment-Related Securities and Unlisted Companies".

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