Ms Anne Gunnell:

No. It is his limit. We welcomed KEEP when it came in but it has some limitations. The remuneration limits are causing difficulty, particularly the share option arm of the scheme where a share option cannot exceed 50% of annual emoluments. In the high-tech sector, companies with high potential which are in the start-up phase are cash strapped and have cashflow issues so they incentivise employees by offering a higher proportion of pay in share options with a lower proportion in salary. They will not qualify for KEEP. Also, under KEEP, an individual has to work full-time for a single company. An employee may, however, devote substantial time to KEEP company but if there is a holding company he or she may have some duties to carry out there, meaning they do not meet the test. The legislation also states that a holding company must wholly own the shares in a KEEP company and not be doing anything else. However, a holding company may have a bank account to meet expenses or to receive dividends and that causes difficulty.

Some SMEs will not have an exit or a third party sale and they may not list so they may need to create liquidity in their own shares by another employee buying the shares or the company buying back its shares but none of that is provided for in the legislation and only new shares qualify for KEEP. The scheme only started this year but this is what we are hearing at this stage about the difficulties people are encountering as they see whether they qualify.