ERSM303500 - Approved Share Incentive Plans: Schedule 2 ITEPA 2003

This Schedule makes provision for the approval of Share Incentive Plans by an officer of HM Revenue and Customs. The schedule consists of eleven parts which contain the requirements that have to be met in order for plans to be approved. The approval process is administered by Employee Shares & Securities Unit (ESSU), Room G52, 100 Parliament Street, London SW1A 2BQ. A new updated version of the ESSUM manual is due to be published in stages from March 2009 and this will include detailed guidance on the way this schedule is interpreted. A brief summary of the requirements for approval follows:

• Part 1 - A brief introduction and definitions of fundamental concepts.
• Part 2 - The general requirements for approval including the “all employee nature of the plan”.
• Part 3 - The eligibility requirements for individuals to participate in the plan.
• Part 4 - The requirements relating to the type of shares that may be awarded
• Part 5 - The requirements relating to free shares including monetary limits and performance allowances.
• Part 6 - The requirements relating to partnership shares including monetary limits, accumulation periods and restrictions on numbers of shares held.
• Part 7 - The requirements relating to matching shares including ratios of matching shares to partnership shares.
• Part 8- The requirements relating to cash dividends and dividend shares including monetary limits on amounts that can be re-invested.
• Part 9 - The requirements for the establishment of a plan trust and the responsibilities of the body of trustees including the operation of PAYE in certain circumstances.
• Part 10 - The formal approval of plans and in certain circumstances the withdrawal of approval.
• Part 11 - The supplementary provisions including the power to require information in relation to the administration of the scheme and an index of defined expressions.