Commentary on Sections Overview
2944.This Schedule, which is introduced in Chapter 6 of Part 7, deals with some of the topics involved in rewriting the legislation relating to share incentive plans (or “SIPs” for short). SIPs were earlier known as employee share ownership plans (or “ESOPs” for short).
2945.Nearly all the source legislation relating to SIPs is contained in Schedule 8 to FA 2000 (referred to in the notes on this Schedule as “Schedule 8”). Schedule 8 was introduced by section 47 of FA 2000; and amended, to a certain extent, by Schedule 13 to FA 2001 (introduced by section 61 of that Act). Further amendments to Schedule 8 have been made by section 39 of FA 2002 and by the Employee Share Schemes Act 2002.
2946.The new legislation relating to SIPs, the majority of which is contained in Chapter 6 of Part 7 and in this Schedule, is called “the SIP code” - a term introduced in section 488. Chapter 6 of Part 7 deals with the tax advantages that an approved SIP provides, and with the tax charges that may arise in certain circumstances.
2947.This Schedule contains further provisions relating to SIPs. After the Introductory Part (Part 1) it deals with the following matters:
	it specifies the requirements that a SIP must meet before it may be “approved” for the purposes of the SIP code (in Parts 2 to 9);
	it deals with the procedural aspects of the approval of plans and with the withdrawal of approval (in Part 10); and
	it deals with supplementary matters (in Part 11).
2948.The majority of the provisions in this Schedule are concerned with the various requirements that a SIP must meet before it may be “approved”. The general policy adopted has been (first) to place the various Parts in an order consistent with that to be found in the rewritten legislation relating to other share schemes; but also (secondly) to deal with those requirements that all SIPs must meet before dealing with the requirements that are not essential. The various requirements have accordingly been placed in a different order from that found in Schedule 8. Part 2 of this Schedule accordingly deals with the general requirements that apply in all cases; Part 3 with the requirements relating to the eligibility of individual employees; and Part 4 with the types of shares that may be awarded. The following Parts then deal with free shares (Part 5), partnership shares (Part 6), matching shares (Part 7) and cash dividends and dividend shares (Part 8). Part 9 is the final Part of this Schedule concerned with the requirements for approval, and deals with the trustees.
2949.Each of Parts 2 to 9 lists, at an early point, the requirements relevant for that Part. Users may find it helpful to be able to refer to these lists. In some cases (for example, in paragraph 6) these lists simply reproduce the source legislation; but in other cases (for example, in paragraph 70) it has been necessary to devise new material.