Enterprising variations

A client has recently approached me to say that they would like to allow an employee to exercise his enterprise management incentive share options immediately.

The options were originally drafted so that they were only exercisable if a turnover or sale condition was met so a deed of variation will be required to allow the exercise.

My initial reaction was that this might be a disqualifying event but ITEPA 2003 s 536(1)(a) confirms that a variation of the terms of an option has to increase the market value of the underlying shares or mean that the qualifying conditions of ITEPA 2003 Sch 5 cannot be met in order for it to be a disqualifying event.

However the employers and advisers’ section of the HMRC share schemes pages under ‘can the terms of the option...