Reform of Company Share Option Plan (CSOP)

The measure

The government has announced two changes to the Company Share Option Plan (CSOP) taking effect from 6 April 2023. The first is to double the maximum employee share option limit, based on market value at grant, from £30,000 to £60,000 for any new options granted from 6 April 2023. 

The second is to relax the current requirement that CSOP options can only be granted over shares of a share class that is ‘worth having’, by either:

• being ‘open market shares’ majority-held by outside investors or
• giving employees control of the company.  

The intention is that this rule will be removed for share options granted under a CSOP from 6 April 2023, and will more closely align the scheme with the similar rules that apply to Enterprise Management Incentive (EMI) schemes. Detailed legislation will be released in the Finance Bill in due course. 

Who will be affected?

The changes will be welcomed by employers who currently offer CSOP to their employees, and by many others whose shares do not currently meet the necessary conditions but may do so going forward. 

When will the measure come into effect?

Both changes are expected to take effect from 6 April 2023.