Commentary on Sections Overview Part 5: Requirements etc. relating to share options Paragraph 22: Requirements as to price for acquisition of shares.
3425.This paragraph derives from paragraph 29 of Schedule 9 to ICTA and contains the rule that the exercise price must be not less than the market value of the shares at the time of the grant of the option. Sub-paragraph (2) allows this price to be fixed in advance of the grant if agreed between the Inland Revenue and the scheme organiser.
3426.The word “manifestly” is retained in sub-paragraph (1). The word is interpreted to mean variations of “evidently”, “clearly” and “obviously”.
3427.Sub-paragraph (3) extends the scope for changes, which are permitted to occur as a result of a variation in the share capital. Paragraph 25 of Schedule 9 to ICTA refers only to price, but in reality the number and description of the shares may be affected. This and the necessity of getting Inland Revenue approval in advance (sub-paragraph (4)) have been recognised in practice. See Change 169 in Annex 1.