ESSUM47960 - Supplementary &
Defined Terms: Tax case Reed International plc
Reed International plc sought to alter the exercise provisions
of its approved executive and savings-related share option schemes
and apply the altered terms to options already granted. It wanted
to remove one of a number of contingencies, the earliest of which
would have triggered the right to exercise an option and its
subsequent lapse six months later (to the extent unexercised). In
the Court of Appeal it was held that the effect of the alteration
was to vary the existing rights of the option-holders, not to
create new or different rights.
In the Court of Appeal, Lord Justice Nourse
- drew the distinction between an
option-holder
- obtaining a right which he did not have before (as
in the Eurocopy case, which he accepted was correctly decided)
- not ceasing to have a right which he did
previously have (which he considered to be the position in the Reed
International plc schemes);
- considered that a very minor improvement
in existing rights would not have the effect of the option-holder
obtaining a new or different right to acquire shares, but
acknowledged that the question of a de minimis improvement is a
matter of degree.
