Tradefair & Financials
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05 May 11
02:55
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Date Joined:
06 Feb 04
I work for BSkyB and I'm part of the Sharesave scheme. I've got the following schemes on the go:
:: 28 months into three years of £100 per month at 372p a share
:: 16 months into three years of £50 per month at 433p a share
:: 4 months into three years of £100 per month at 565p a share
Now I've always thought Sharesave is a really good investment - you get a 25% head start on the share price, and even if it goes títs-up you still get your money back. But with the proposed takeover from News Corp, we might all be sitting on a tidy little sum.
We are all under the impression that when the takeover goes through, we will be able to sell our shares at the agreed price - so if it went through right now at the current price, I'd be able to sell £2,800 of my 372p shares at 848p, and so on.
However, I was told a few hours ago by someone that his mate (who's a trader) had said that as we entered into a contract at the start of the Sharesave scheme, we are entitled to the full quota of shares at 372p, 433p and 565p.
Is this right, or (as I suspect) is this bóllocks? Surely we can't force the company to pay us for shares that we haven't yet bought?
:: 28 months into three years of £100 per month at 372p a share
:: 16 months into three years of £50 per month at 433p a share
:: 4 months into three years of £100 per month at 565p a share
Now I've always thought Sharesave is a really good investment - you get a 25% head start on the share price, and even if it goes títs-up you still get your money back. But with the proposed takeover from News Corp, we might all be sitting on a tidy little sum.
We are all under the impression that when the takeover goes through, we will be able to sell our shares at the agreed price - so if it went through right now at the current price, I'd be able to sell £2,800 of my 372p shares at 848p, and so on.
However, I was told a few hours ago by someone that his mate (who's a trader) had said that as we entered into a contract at the start of the Sharesave scheme, we are entitled to the full quota of shares at 372p, 433p and 565p.
Is this right, or (as I suspect) is this bóllocks? Surely we can't force the company to pay us for shares that we haven't yet bought?
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if you own the option to buy the shares at a fixed price then you effectively can own those shares at that fixed priced (the value of the option being the difference between the strike (372p, 433p, 562p) and the value of the underlying share price + time value) meaning you have the option to exercise your option at (eg372p) and then sell immediately at market value. your profit is the difference between 372 and market.
so for example, if you own the option to buy at 565p and they are valued at 848p then the value of the option is at least 283p(+time value).
so for example, if you own the option to buy at 565p and they are valued at 848p then the value of the option is at least 283p(+time value).
this is effectively a hedged bet on the part of BSkyB. if the company (share price) does poorly then it pays it's creditors (you) a fixed rate. if it does well then it shares that profit with you as an incentive.
In my scheme, if the company gets taken over, you are immediately given your full quota of options, even if you hadn't accrued them all yet. This is a pretty standard set up.
So yes, I think you will just be given the remaining options.
Your return will thus be £12,134.81, of which £8134.81 is profit, plus £4000 you put in.
So yes, I think you will just be given the remaining options.
Your return will thus be £12,134.81, of which £8134.81 is profit, plus £4000 you put in.
What happens if my company is taken over or sold?
Some schemes may allow you to exercise your option to buy shares within a specified period if
• the company whose shares are used in the scheme is taken over, or
• the company you work for is sold out of a group
If you exercise your option in these circumstances within three years of receiving it, you may have to pay some income tax on the gain you make by doing so.
If the company whose shares are used in the scheme is taken over by another company, some schemes may allow you to exchange or 'roll over' your option. This means you exchange an option over shares in the old company for a new option over shares in the new company.
A 'roll over' has to be agreed to by the new company and the value of the new option must remain the same as the value of the old option. After a 'roll over' the new option will continue exactly as before and will be subject to the same rules as the old option. The major difference is that when you exercise the option you will obtain shares in the company that has taken over the original scheme organiser.
How much tax will I have to pay?
If your option does not qualify for income tax relief, you will have to pay income tax through your self assessment on the amount of the 'gain' you make by using your option to buy shares.
The amount of the 'gain' is
• what your shares are worth when you buy them, less
• the price you pay for your shares, less
• the amount (if any) you paid for the option itself when you received it.
Example
1/6/2003 You are given an option and agree to save £100 a month.
You do not pay anything for the option.
The fixed price of one share under your option is £1.25
1/4/2004 Your company is sold and you can exercise your option.
You have saved £100 a month for 10 months (£1,000).
10/4/2004 You exercise your option and your £1,000 savings to buy 800 shares at the fixed price of £1.25 each.
The shares are worth £2 each (total value £1,600).
The taxable amount is:
Value of shares when you bought them £1,600 Less amount paid for option (0)
Less price paid for shares (£1,000)
2004/05 Taxable amount (Gain) £600
Taken from here
http://www.hmrc.gov.uk/shareschemes/employee-guidance.pdf
The information was published in 2008, but is still current.
Some schemes may allow you to exercise your option to buy shares within a specified period if
• the company whose shares are used in the scheme is taken over, or
• the company you work for is sold out of a group
If you exercise your option in these circumstances within three years of receiving it, you may have to pay some income tax on the gain you make by doing so.
If the company whose shares are used in the scheme is taken over by another company, some schemes may allow you to exchange or 'roll over' your option. This means you exchange an option over shares in the old company for a new option over shares in the new company.
A 'roll over' has to be agreed to by the new company and the value of the new option must remain the same as the value of the old option. After a 'roll over' the new option will continue exactly as before and will be subject to the same rules as the old option. The major difference is that when you exercise the option you will obtain shares in the company that has taken over the original scheme organiser.
How much tax will I have to pay?
If your option does not qualify for income tax relief, you will have to pay income tax through your self assessment on the amount of the 'gain' you make by using your option to buy shares.
The amount of the 'gain' is
• what your shares are worth when you buy them, less
• the price you pay for your shares, less
• the amount (if any) you paid for the option itself when you received it.
Example
1/6/2003 You are given an option and agree to save £100 a month.
You do not pay anything for the option.
The fixed price of one share under your option is £1.25
1/4/2004 Your company is sold and you can exercise your option.
You have saved £100 a month for 10 months (£1,000).
10/4/2004 You exercise your option and your £1,000 savings to buy 800 shares at the fixed price of £1.25 each.
The shares are worth £2 each (total value £1,600).
The taxable amount is:
Value of shares when you bought them £1,600 Less amount paid for option (0)
Less price paid for shares (£1,000)
2004/05 Taxable amount (Gain) £600
Taken from here
http://www.hmrc.gov.uk/shareschemes/employee-guidance.pdf
The information was published in 2008, but is still current.
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