Share plans and ‘material interest’

Copyright © 2025 LexisNexis

Published by a LexisNexis Share Incentives expert

Practice notes

Share plans and ‘material interest’

Copyright © 2025 LexisNexis

Published by a LexisNexis Share Incentives expert

Practice notes

In order to be eligible for the grant of share options under either of the following tax-advantaged employee share arrangements:

•
a company share option plan (CSOP), or
•
an enterprise management incentives (EMI) scheme,

employees must not have a ‘material interest’.

A material interest test also used to apply to the other two tax-advantaged share arrangements, the share incentive plan (SIP) and the save as you earn (SAYE) scheme (otherwise known as a Sharesave), but, in both cases, the requirement for this test was repealed by the Finance Act 2013 with effect for any awards made under these plans on or after 17 July 2013.

This Practice Note sets out the type of scenarios in which a material interest might arise and the various components of the test. Some elements of the test are different for CSOPs and EMI options, some are similar and some the same. These will be indicated in each relevant section.

Rationale behind the material interest test

The material interest tests are contained in the EMI and CSOP legislation to avoid

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Jurisdiction(s):

United Kingdom

Key definition:

Share definition

What does Share mean?

A stake in a company which confers ownership rights on the holder. shares are also known as equities.

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