Finance Act, 1982

The period of retention, the release date and the appropriate percentage.

52.—(1) No scheme shall be approved of as mentioned in section 51 (1) unless the Revenue Commissioners are satisfied that, whether under the terms of the scheme or otherwise, every participant in the scheme is bound in contract with the company concerned—

(a) to permit his shares to remain in the hands of the trustees throughout the period of retention;

(b) not to assign, charge or otherwise dispose of his beneficial interest in his shares during that period;

(c) if he directs the trustees to transfer the ownership of his shares to him at any time before the release date, to pay to the trustees before the transfer takes place a sum equal to income tax at the standard rate on the appropriate percentage of the locked-in value of the shares at the time of the direction; and

(d) not to direct the trustees to dispose of his shares at any time before the release date in any other way except by sale for the best consideration in money that can reasonably be obtained at the time of the sale.

(2) No obligation placed on the participant by virtue of subsection (1) (c) shall be construed as binding his personal representatives to pay any sum to the trustees.

(3) Any obligation imposed on a participant by virtue of subsection (1) shall not prevent the participant from—

(a) directing the trustees to accept an offer for any of his shares (in this paragraph referred to as “the original shares”), if the acceptance or agreement will result in a new holding, as defined in paragraph 2 (1) (b) of Schedule 2 to the Capital Gains Tax Act, 1975 , being equated with the original shares for the purposes of capital gains tax; or

(b) directing the trustees to agree to a transaction affecting his shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting—

(i) all the ordinary share capital of the company in question or, as the case may be, all the shares of the class in question; or

(ii) all the shares, or shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in an approved scheme; or

(c) directing the trustees to accept an offer of cash, with or without other assets, for his shares if the offer forms part of a general offer which is made to holders of shares of the same class as his or of shares in the same company and which is made in the first instance on a condition such that if it is satisfied the person making the offer will have control of that company, within the meaning of section 158 of the Corporation Tax Act, 1976 ; or

(d) agreeing, after the expiry of the period of retention, to sell the beneficial interest in his shares to the trustees for the same consideration as, in accordance with subsection (1) (d), would be required to be obtained for the shares themselves.

(4) If, in breach of his obligation under subsection (1) (b), a participant assigns, charges or otherwise disposes of the beneficial interest in any of his shares, then, as respects those shares, he shall be; treated for the purposes of this Chapter as if, at the time they were appropriated to him, he was ineligible to participate in the scheme and section 56 shall apply accordingly.

(5) In this Chapter “the period of retention”, in relation to any of a participant's shares, means the period beginning on the date on which they are appropriated to him and ending on the second anniversary of that date or, if it is earlier—

(a) the date on which the participant ceases to be an employee or director of a relevant company by reason of injury or disability or on account of his being dismissed by reason of redundancy, within the meaning of the Redundancy Payments Act, 1967 ;

(b) the date on which the participant reaches pensionable age, as defined in section 2 of the Social Welfare (Consolidation) Act, 1981 ; or

(c) the date of the participant's death.

(6) In subsection (5) (a) “relevant company” means the company concerned or, if the scheme in question is a group scheme, a participating company, and in the application of subsection (5) (a) to a participant in a group scheme, the participant shall not be treated as ceasing to be an employee or director of a relevant company until such time as he is no longer an employee or director of any of the participating companies.

(7) In this Chapter “the release date”, in relation to any of a participant's shares, means the seventh anniversary of the date on which the shares were appropriated to him.

(8) Subject to section 56 (4), for the purposes of provisions of this Chapter charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of his shares, any reference to “the appropriate percentage” in relation to those shares shall be determined according to the time of that event, as follows:—

(a) if the event occurs before the fourth anniversary of the date on which the shares were appropriated to the participant and paragraph (c) (i) does not apply, the appropriate percentage is 100 per cent.;

(b) if the event occurs on or after the fourth anniversary and before the fifth anniversary of the date on which the shares were appropriated to the participant and paragraph (c)(i) does not apply, the appropriate percentage is 75 per cent.;

(c) if—

(i) in a case where the participant—

(I) ceases to be an employee or director of a relevant company as mentioned in subsection (5) (a), or

(II) reaches pensionable age, as defined in section 2 of the Social Welfare (Consolidation) Act, 1981 ,

the event occurs before the sixth anniversary of the date on which the shares were appropriated to him, or

(ii) in any other case, the event occurs on or after the fifth anniversary of that date and before the sixth anniversary of it,

the appropriate percentage is 50 per cent.; and

(d) if the event occurs on or after the sixth anniversary and before the seventh anniversary of the date on which the shares were appropriated to the participant, the appropriate percentage is 25per cent.