Share Scheme Jargon Explained
The complexities involved in share scheme implementation and design are difficult enough to grasp despite the added complexity of technical jargon. We've taken the most commonly used share scheme jargon and simplified i
- Allot- Where a company issues new shares to a person, usually in return for cash.
- Appropriate (SIP)- Under a Share Incentive Plan when shares are allocated in trust for the benefit of a named employee.
- EMI- The Enterprise Management Incentive is a government approved scheme that was introduced in the Finance Act 2000. It is aimed at SME's to encourage growth. The scheme offers great flexibility with considerable tax advantages. Options are offered to participants, which are capable of exercise at a later date.
- Exercise- When the shares are bought at the agreed price on the date of grant.
- Grant- When the options are given.
- Lapse- When the right to buy the shares at the exercise price is lost.
- Market value- If the shares are listed, an average of mid- market prices. If the shares are quoted but not listed, the market value may need to be adjusted to allow for distortions in the quoted prices. Unquoted shares may be valued by process of analysis.
- Nil-cost options- Share options that can be exercised without payment of a subscription price.
- Nominal value- The face value of a share. This is usually a nominal amount such as 1 or 1p. It bears no relation to the market value of the share or amount paid up on it.
- Pre-emption rights- Rights of first refusal of existing shareholders when new shares become available for sale and for when existing shares are to be transferred.
- Share option- The right (but not the obligation) to acquire a share usually at a future date or dates at a price or on terms agreed at the time the option is granted.
- SIP- A statutory all employee share scheme under which employees are appropriated shares in trust, and/or have the opportunity to purchase shares.
- Vest- When conditions have been met which allow shares under option to be purchased.
If you would like a more comprehensive list of all our share scheme jargon please see the glossary on our website here or if you would like advice then call 0208 949 5522 and speak to one of our advisors who would be more than happy to help.
Created: January 25, 2012, 10:15 am
