Many companies conduct share valuations to serve as a starting point for determining share value. However, specific requirements outlined in tax legislation and case law must be met for a valid fiscal valuation. Consequently, companies often enlist the expertise of third-party valuers such as Hamilton Blake to determine share value for tax purposes.
From a tax perspective, there are many reasons why share valuation will be important:
Other reasons typically include:
- From a tax perspective, there are many reasons why share valuation is important -
Tax Issues
A Company Share Option Plan (CSOP) cannot offer options at a price lower than the market value on the day they are granted. Conversely, Enterprise Management Incentive (EMI) options allow for flexibility in setting the exercise price, permitting it to be either below or above the tax market value of the shares, based on commercial considerations.
To prevent a tax liability upon acquisition, directly acquired shares must be obtained at a price no lower than their market value. In cases where the share price, proposed holding size, or participant's profile pose funding challenges for acquisition, alternative arrangements like growth shares, deferred shares, or joint share plans may be explored. These alternatives may require a share valuation to establish the market value of the shares.
If your company is operating a Company Share Option Plan (CSOP), the exercise price of share options cannot be lower than their market value on the day they are granted. On the other hand, Enterprise Management Incentive (EMI) options can be granted at a lower than their tax market value. This makes them more attractive for commercial reasons.
Share Valuation with Hamilton Blake
We understand that share valuations are frequently required during challenging or tense circumstances. Whether it's resolving shareholder conflicts, contemplating a sale, navigating relationship breakdowns or fulfilling year-end audit obligations, we ensure prompt and efficient delivery of impartial, professional valuations.
Our goal is to furnish our clients with comprehensive valuation services that instil confidence in their decision-making processes.
TAX DOESN'T HAVE TO BE TAXING
Tax can be tricky, through our team of dedicated tax specialists, we are able to help with everything from Basic Business Structuring to Share Schemes.
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