ETASSUM45130 - Schedule 4 Company Share Option Plan (CSOP): Exchange of share options: Scheme rules

The provisions of paragraph 26 are not a requirement for a Schedule 4 CSOP scheme. But if companies wish to include such a 鈥渞ollover鈥� facility in the rules of a Schedule 4 CSOP scheme, they must do so precisely in accordance with the statutory provisions.

Although the terms 鈥渆xchange鈥� and 鈥渞ollover鈥� of options are in common use, the legislation refers to a 鈥渞elease鈥� of old options in consideration of the grant of new options. Scheme rules should refer to 鈥渞eleases鈥� in the same way.

Rollover of options can only be:

  • effected if the scheme rules provide for it, and
  • applied to those options which were granted on terms which included such provisions.

The statutory requirements which must be reflected in the scheme rules if rollover provisions are to be qualifying centre on:

  • when a rollover of options can take place (paragraph 26(2) and (3)) - see ETASSUM45140,
  • the new options being 鈥渆quivalent鈥� to the old options (paragraph 27(4)) 鈥� see ETASSUM45210.

Whether the new options are equivalent is based on:

  1. the nature of the shares that can be the subject of the new options,
  2. the exercise provisions of the new options,
  3. the number of shares that will be the subject of the new options, and
  4. the price at which the new options may be exercised.