Part VIII Share Option Schemes or Share Schemes

842

(1) An issuer's subsidiaries must also comply with Rules 843 to 860 in relation to share option schemes or share schemes implemented by them.

(2) Rule 842(1) does not apply to the share option scheme or share scheme of an issuer's subsidiary which is listed on an approved exchange that has rules which safeguard the interests of shareholders according to similar principles in Part VIII.

(3) The approval of an issuer's shareholders must be obtained for any share option scheme or share scheme implemented by:

(a) the issuer; and

(b) a principal subsidiary of the issuer if the scheme may cause Rule 805(2) to apply.

(4) If shareholder approval is not required pursuant to Rule 842(3), an issuer must announce the principal terms of any such share option scheme or share scheme implemented by its subsidiaries.

Terms of Schemes

843

Participation in a scheme must be restricted to directors and employees of the issuer and its subsidiaries, except that:

(1) directors and employees of an associated company of the issuer may participate in the scheme if the issuer has control over the associated company.

(2) directors and employees of the issuer's parent company and its subsidiaries who have contributed to the success and development of the issuer may participate in the scheme.

844

A limit on the size of each scheme, the maximum entitlement for each class or category of participant (where applicable), and the maximum entitlement for any one participant (where applicable) must be stated.

845

The amount, if any, payable on application or acceptance, the period in or after which payments or calls, or loans to provide the same, may be paid or called must be set out.

846

The exercise price of options to be granted must be set out. Options granted at a discount may be exercisable after 2 years from the date of grant. Other options may be exercisable after one year from the date of grant.

847

The voting, dividend, transfer and other rights attached to the securities, including those arising from a liquidation of the issuer must be stated.

848

The scheme must be administered by a committee of directors of the issuer. However, where the issuer has a parent company, the parent company may nominate one person to the committee. A participant who is a member of the committee must not be involved in its deliberations in respect of options to be granted to that participant.

849

(1) A scheme must provide for adjustment of the subscription or option price or the number or amount of securities under the scheme not already allotted, in the event of a bonus issue and other circumstances (e.g. rights issue, capital reduction, subdivision or consolidation of shares or distribution).

(2) The adjustment must be made in such a way that a participant will not receive a benefit that a shareholder does not receive.

(3) The issue of securities as consideration for an acquisition will normally not be regarded as a circumstance requiring adjustment.

(4) Adjustments other than on a bonus issue must be confirmed in writing by the company's auditors to be fair and reasonable.

Amended on 7 February 2020 7 February 2020.

850

The scheme must provide that the provisions relating to the matters contained in Rules 843 to 848, and Rules 852 to 853 cannot be altered to the advantage of the participants without prior shareholder approval.

851

(1) An issuer must provide in the scheme that the following disclosure will be made in its annual report:

(a) The names of the members of the committee administering the scheme.

(b) The information required in the table below for the following participants:

(i) directors of the issuer;

(ii) participants who are controlling shareholders of the issuer and their associates; and

(iii) participants, other than those in Rule 851(1)(b)(i) and (ii) above, who receive 5% or more of the total number of options available under the scheme;

Name of participant

Options granted during financial year under review (including terms)

Aggregate options granted since commencement of scheme to end of financial year under review

Aggregate options exercised since commencement of scheme to end of financial year under review

Aggregate options outstanding as at end of financial year under review

(c) In respect of options granted to directors and employees of the parent company and its subsidiaries:

(i) The names of and number and terms of options granted to each director or employee of the parent company and its subsidiaries who receives 5% or more of the total number of options available to all directors and employees of the parent company and its subsidiaries under the scheme, during the financial year under review; and

(ii) The aggregate number of options granted to the directors and employees of the parent company and its subsidiaries for the financial year under review, and since the commencement of the scheme to the end of the financial year under review.

(d) The number and proportion of options granted at a discount during the financial year under review in respect of every 10% discount range, up to the maximum quantum of discount granted.

(2) If any of the requirements in Rule 851(1) is not applicable, an appropriate negative statement must be included.

Shareholder Approval

852

Participation in a scheme by controlling shareholders and their associates must be approved by independent shareholders of the issuer. A separate resolution must be passed for each person and to approve the actual number and terms of options to be granted to that participant.

853

Any grant of options to a director or employee of the issuer's parent company and its subsidiaries that, together with options already granted to the person under the scheme, represents 5% or more of the total number of options available to such directors and employees, must be approved by independent shareholders. A separate resolution must be passed for each such person and to approve the aggregate number of options to be made available for grant to all directors and employees of the parent company and its subsidiaries.

854

When seeking shareholder approval, an issuer must explain the basis for the following in the circular:

(1) Participation by, and the specific grant of options to, each of the controlling shareholders or their associates;

(2) Participation by, and the grant of options to, directors and employees of the parent company and its subsidiaries;

(3) Participation by non-executive directors;

(4) Participation by directors and employees of the associated companies;

(5) Discount quantum; and

(6) Size of the scheme.

855

An issuer must briefly describe in the circular the potential cost to it arising from the grant of options.

856

(1) An issuer must disclose the terms of the scheme or a summary of the principal terms in the circular. The summary must contain all the information required under Rules 843 to 848, and Rules 852 to 853.

(2) If only a summary is disclosed, the issuer must make the terms of the scheme available for inspection at its registered office for at least 14 days before the date of the general meeting.

857

Where directors of the issuer are trustees of the scheme or have an interest direct or indirect in the scheme, the circular must disclose that interest.

858

Shareholders who are eligible to participate in the scheme must abstain from voting on any resolution relating to the scheme (other than a resolution relating to the participation of, or grant of options to, directors and employees of the issuer's parent company and its subsidiaries).

859

The following categories of persons must abstain from voting on any resolution relating to the participation of, or grant of options to, directors and employees of the parent company and its subsidiaries:

(1) the parent company (and its associates); and

(2) directors and employees of the parent company (and its subsidiaries), who are also shareholders and are eligible to participate in the scheme.

860

If options have been granted under a previous scheme, the circular to shareholders seeking approval for the new scheme must disclose the following about the previous scheme:

(1) total numbers of shares reserved and allotted;

(2) number of participants;

(3) any material conditions to which the options are subject; and

(4) the following details of options granted to directors of the issuer, and participants who are controlling shareholders and their associates:

(a) dates options were granted;

(b) number of shares offered under the options; and

(c) number of shares allotted upon exercise of options.