§ 2.0 a.m.
§ Dr. GilbertI beg to move Amendment No. 151, in page 54, line 21, leave out from 'Act' to 'and' in line 22.
The effect of the Amendment is to delete the option in subsection (l)(a) that the acquisition of shares by a participant in a scheme can benefit from the provisions of the scheme if the scheme had been approved at some time after it had been in effect.
We see no reason why schemes which had been in effect before they were approved should benefit from the provisions of this legislation.
§ Mr. Patrick JenkinThis would be an unreasonable and unnecessary limitation on the operation of share option schemes. If a company makes sure that its scheme is capable of being approved, there is no reason why it should wait for the formal approval before putting it into operation. If subsequently something has gone wrong and the scheme fails to be approved, the tax consequences will follow and the participants in the scheme will find themselves with an unwelcome surprise.
There are provisions in para. 3 of Part 1 of Schedule 12 of the share option legislation making it impossible finally to approve a scheme until it is known what the share acquisition price and the market value of the shares will be. Inevitably, therefore, approval has to be postponed until after the scheme is in operation. If the Amendment were accepted, that kind of scheme would become impossible.
It may be that the hon. Member for Dudley (Dr. Gilbert) is afraid that a scheme might be approved which differed from the scheme as it was when the shares were issued and that therefore shares might be issued on more favourable terms than the Revenue would approve. There is no fear of that. If the Revenue does not approve a scheme as it was at the date when it was issued, clearly those shares cannot claim the benefit of the scheme.
I hope that the hon. Gentleman will perhaps feel that his Amendment goes a bit too far and is unnecessary.
§ Amendment negatived.