When an employee acquires shares carrying restrictions - leaver provisions, transfer restrictions, forfeiture or compulsory transfer triggers - the shares are treated as restricted securities under Part 7 of ITEPA 2003. A Section 431 election made jointly by employer and employee within 14 days of acquisition disapplies the restricted-securities tax treatment by treating the shares as unrestricted from outset.
When is it required?
- Sweat equity and founder share grants subject to vesting or leaver provisions.
- Acquisitions under non-EMI share schemes (growth shares, restricted shares, unapproved options).
- Post-acquisition share transfers in restructurings.
Our methodology
We determine UMV by stripping out restrictions, anchored on earnings multiples or net assets as appropriate, with waterfall analysis where the cap table includes preferences or convertibles. The report is delivered in time for the 14-day election deadline.