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Includes any scheme, agreement or understanding, whether or not legally enforceable.


In relation to the material interest test:

       any relative (husband, wife, parent, child or remoter forbear or issue) or partner of the individual

       the trustee(s) of any settlement in relation to which the individual, or any relative (living or dead) of his or her, is, or was, a settlor

       where the individual is interested in any shares or obligations of the company which are subject to any trust, or are part of the estate of a deceased person, the trustee(s) or personal representative.


Any body corporate.


The power of a person to procure that the affairs of a company are conducted in accordance with the wishes of that person. In the case of a partnership, control means the right to a share of more than one half of the assets, or more than one half of the income of the partnership. This power or right can be by means of holding shares, the possession of voting power, by virtue of the Articles of Association or any other document. Control can be direct or indirect.

CSOP option

A non-savings related share option scheme, approved by HM Revenue & Customs.

Disqualifying events

These include:

       the company becoming a 51% subsidiary of another company or coming under the control of another company (or another company and any other person connected with that company) without being a 51% subsidiary

       the company ceasing to meet the trading activities requirement

       the employee ceasing to be an eligible employee by ceasing to be an employee of the company or subsidiary, or failing to meet the working time commitment

       any variation of the terms of the option which increase the market value of the shares that are under option, or causes the option not to satisfy the requirements of a qualifying option

       certain alterations to the share capital of the company which increases the market value of the shares to which the option relates, or causes the option not to satisfy the requirements of a qualifying option

       in certain circumstances, the conversion of the shares to which the option relates to a different class of shares

       the grant to the employee of a CSOP option if, immediately after it was granted, the employee holds unexercised employee options over shares with a total value of more than £250,000 of shares

       where the company was considered to be qualifying on the grounds that it was preparing to carry on a qualifying trade, ceasing to make preparations to carry on a qualifying trade, or not beginning to carry on a qualifying trade within two years from the grant of the option

       the employee's relevant working time amounting to less than 25 hours a week and less than 75% of his or her working time in any tax year.

Excluded activities

These include:

       dealing in land, commodities, futures, shares, securities or other financial instruments

       dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution

       banking, insurance, money-lending, debt-factoring, hire purchase financing or other financial activities

       leasing (including the letting of ships on charter or other assets on hire), or receiving royalties or licence fees

       providing legal or accountancy services

       property development

       farming or market gardening

       holding, managing or occupying woodlands, or any other forestry activity or timber production

       operating or managing hotels or comparable establishments, or managing property used as a nursing home or a residential care home

       shipbuilding, steel production or coal production

       providing facilities to a related party engaged in any of the above.  


In relation to a parent company, that company and its 51% subsidiaries.

Material interest

Beneficial ownership of, or the ability to control directly or through other companies or by any other indirect means, more than 30% of the ordinary share capital of the company; or, in the case of a close company, the right to receive greater than 30% of the assets of the company available in the event of the winding up of the company or any other circumstances.

Non-qualifying activities

Excluded activities or activities carried on otherwise than in the course of a trade.


Any right to acquire shares.

Ordinary share capital

All the issued share capital of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company.

Parent company

A company that has one or more 51% subsidiaries.

Qualifying trade

A trade conducted on a commercial basis with a view to the realisation of profits and which does not consist wholly or substantially in carrying on excluded activities.

Single company

A company that has no 51% subsidiaries.


Any company which the company controls, either on its own or with any person connected with it.

Working time

Time spent on remunerative work, as an employee or self-employed person, or time which would have been spent but for injury, ill-health, disability, pregnancy, childbirth, maternity or paternity leave, parental leave, reasonable holiday entitlement or notice of termination.

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