The Gazette 1986

j u l y / a u g u s t 1986

g a z e t t e

will be eligible to participate in the scheme on similar terms (paragraph: 5(2)). These are minimum provisions so part-time employees or employees with less than 5 years service may participate. There may be a variance in the number of shares appropriated by reference to the levels of remuneration, length of service or other similar factors. Thus, an employee with fewer than or more than 5 years service may participate on similar terms and have a different quantity of shares appropriated to them. It might be noted that the wording 'similar factors' is not defined — thus, for example, attendance record could be used as an appropriation measure. Further, one might suggest that the Revenue may only approve objective factors so that one section of the workforce would not be unreasonably excluded. There are certain catagories of individual ineligible to participate in such schemes, namely:— - where the individual was not an employee or a director of the company or a participating company at the date of appropriation or within the preceding 18 months (paragraph 9) - where in any year of assessment if in that year the individual has had shares appropriated to him under another approved scheme established by the company concerned or associated companies (paragraph 10) - where the individual has at the date of appropria- tion (or at any time within the preceding 12 months) a material interest in a close company which is:— - the company whose shares are to be appro- priated; or - a company which has control of that company or is a member of a consortium which owns that company whose shares are to be appropriated. For the purposes of this legislation 'close company' and 'material interest' has an altered meaning from the Corporation Tax Act, 1976 (paragraph 11). Shares Part II of the Third Schedule lays down conditions attaching to such shares. Shares must form part of the ordinary share capital of:— - the company concerned - a company which has control of the company concerned; or - a company which either is or has control of a company which is a member of a consortium owning either the company concerned or a company having control of that company and beneficially owns not less that 3/20th of the ordinary share capital of the owned company (paragraph 5). Ordinary share capital means all the issued share

capital of the company excluding capital which pays dividends to its holders at a fixed rate who have no other right to share in the profits (s.50(l)). The shares must be:— - shares of a class quoted on a recognised stock exchange - shares in a company which is not under the control of another company; or - shares in a company which is under the control of a company (other than a close company — if resident in the State) whose shares are quoted on a recognised stock exchange (paragraph 6). Exchange control approval from the Central Bank may be necessary if overseas security is involved. - fully paid up - not redeemable - not subject to any restrictions other than those which attach to all shares of the same class (i.e., value at date of appropriation) (paragraph 8). These rules are formulated in the above form so that first, the participants should receive shares in a company with which their employment has some connection albeit distant in some circumstances and, secondly, that the participants should share in the profits and losses of the company whose shares they own. Dividends The trustees receive the dividends on the total of the shares held by them. The dividend due by each employee is then transferred to him. The employee receives a statement containing the amount of dividend and tax credit. Dividends are taxed in the normal way. Accordingly, the rate of tax will depend on an employee's earnings. Disposal of Shares Every participant in approved schemes must:— - permit his shares to remain in the hands of the trustees throughout the period of retention (s.52(l)(a)). This is a period of 2 years or an earlier date if it is due to the employee ceasing employment due to his:— - injury, disability or redundancy - reaching 66 years - death - not assign, charge or dispose of his interest in the shares during the said period (s.52(l)(b)) - not direct the trustees to dispose of his shares before the release date except by sale for the best possible price (s.52(l)(d)) - if directing the trustees to transfer the ownership of his shares before the release date (i.e. 5th anniversary) pay the trustees before such transfer, a sum equal to standard rate income tax of the appropriate percentage (see below), on the locked-

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