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Director acquired share options by reason of employment

By Mark McLaughlin, December 2023

An individual who was originally a private equity investor and who exercised an option over shares after subsequently becoming a director of the company was deemed to have acquired the option by reason of his employment, which was therefore subject to income tax. 

Summary 

An individual who was originally a private equity investor and who exercised an option over shares after subsequently becoming a director of the company was deemed to have acquired the option by reason of his employment, which was therefore subject to income tax. 

Background 

In 2006, the respondent company (VH) granted an option to another company (Q) to acquire shares in VH (the ‘2006 option’). By the end of 2006, it became clear that VH was underperforming. As part of a rescue funding package, VH and Q agreed to amend the 2006 option. In July 2007, VH and Q entered into a new option agreement

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