Part 2: General requirements for approval
Paragraph 4: General requirements for approval: introduction
3259.This paragraph derives from part of paragraph 1(1) of Schedule 9 to ICTA. The difference stems from the new approach of providing its own introduction to each type of requirement. This new layout is also a feature of the succeeding Parts of this Schedule.
Paragraph 5: General restriction on contents of scheme
3260.This paragraph derives from paragraph 2(1) of Schedule 9 to ICTA. It sets out the proposition in that sub-paragraph (that a scheme must not contain features, which are neither essential nor reasonably incidental to the specified purpose of the scheme).
Paragraph 6: All-employee nature of scheme
3261.This paragraph derives from paragraph 2(3)(a) and part of paragraph 26(1) of Schedule 9 to ICTA. As a whole the new paragraph makes it clear that a SAYE scheme has to be open to a wide category of employees and directors but can be even more comprehensive in its approach.
3262.The new entry in sub-paragraph (2)(d) contains a cross-reference to paragraph 11. This makes it clear that a scheme must not allow participation by anyone with a material interest.
3263.In sub-paragraph (3) the words “any description of employees or former employees” have been replaced by “any description of persons” who meet or have met the conditions in sub-paragraph (2). The inclusion of former employees covers circumstances where the employee has left a group scheme company for an associated company, which is not within the group scheme. The wording confirms that the provision applies to directors and secondly makes it clear that former employees can meet the required conditions. See Change 166 in Annex 1.
3264.Sub-paragraph (4) emphasises the “let-out” in paragraph 2(3)(a) of Schedule 9 to ICTA. The words “any provision required or authorised” by the provisions of this Schedule may also be found in the SIP code (see Schedule 2) and more properly reflect the various ways the rules are expressed.
Paragraph 7: Participation on similar terms
3265.This paragraph derives from the final part of paragraph 26(1) and from paragraph 26(2) of Schedule 9 to ICTA.
3266.This paragraph provides that there must be similar terms for every person who participates in the scheme, but that certain factors, such as length of service, may be taken into account. The definition of “participate” is in paragraph 2(2).
3267.Although, in general, references to “rights” have been changed to “share options”, in the context of sub-paragraph (2) “rights” has been retained to make it clear that this covers the full participatory rights, that is the rights to obtain as well as to exercise share options.
Paragraph 8: No preferential treatment for directors and senior employees
3268.This paragraph derives from paragraph 2(3)(b) and (4) Schedule 9 to ICTA. The provision is intended to prevent a group of companies from arranging among its members to set up a scheme to favour the highly paid. These are described in the heading as “senior” to avoid the confusion with earlier benefits legislation, which referred to higher paid employees.
3269.The arrangement envisaged here is the setting up of a scheme in which the only group companies participating would be those employing the persons in the group whom it was designed to benefit on a selective basis. The wide definition of “a group of companies” in sub-paragraph (2) (rewriting paragraph 2(4) of Schedule 9 to ICTA) may accordingly go beyond the group companies in the group scheme.
