We were so pleased to have been involved in this webinar at the beginning of 2016 when many companies are working with administrators and advisors to plan for the year ahead. We were delighted to talk through what has changed over the past year and what changes remain in the pipeline. If you didn’t get a chance to join us at the webinar you can watch a recording using the button below.
One of the exciting things about being involved with equity incentives and share plans is the combination of legal, tax, regulatory and governance elements which all need to be brought together to run a successful and compliant programme. There are also challenges in terms of the number of developments we have to keep up to date with, not to mention the fact that no two jurisdictions take the same approach.
During the webinar we spoke about the following UK developments:
- Recent tax changes
- Practical operation of malus and clawback provisions and holding periods
- The EU's Market Abuse Regulation, which will replace the UK Model Code from July
How do the new tax changes affect you?
Changes to tax-advantaged employee share plans brought in by Finance Acts 2013 and 2014 are now largely bedded in, and the volume of legislative change in this area has slowed.
However, the Finance Bill 2016 (FB16) does contain further amendments that affect share plans. These changes are for the most part "tidying-up" and although their impact may be small, they are welcome. During the webinar, we ran through the practical effect of the changes and highlighted where further developments or guidance may still be expected from HMRC.
We took a brief look at the changes affecting Enterprise Management Incentive (EMI) plans. For many listed companies, EMI is out of reach due to the limits on gross assets and numbers of employees. But it still remains relevant to some as it’s useful to have awareness in the context of the acquisition of smaller companies.
Companies operating tax-advantaged Share Incentive Plans (SIPs) will need to consider the impact of the changes in dividend taxation for UK individuals from 6 April 2016. The position for SIPs was not addressed in the initial announcements on dividend taxation in 2015, but FB16 brings further clarity.
What governance implications could you face?
Many UK listed companies, in line with the UK Corporate Governance Code and Investment Association guidelines, have now included provision for malus and clawback in the terms of their equity plan. In response to governance development and investor pressure, many companies have included a post-vesting holding period for award shares which have already vested for performance.
The webinar discussion focused on the practical implications of operating malus, clawback, post-vesting holding periods and the interaction of these elements with share ownership guidelines.
How will you plan for the Market Abuse Regulation?
The Market Abuse Regulation will have direct effect in the EU from 3 July 2016. In the UK, it will replace the current "Model Code", on dealings in securities by directors and senior managers. At the moment we don't have the final position on the new regime as we’re waiting on final guidance from the European Securities and Markets Authority (ESMA) and the UK's Financial Conduct Authority (FCA). But it is important to be aware of this change and plan ahead.
If you weren’t able to join us for the webinar you can watch it here.