Mr. Fergus Sharpe:

That is not a problem. Having lobbied for the introduction of a key employee engagement programme in recent years, we welcomed the introduction of KEEP. As the committee will have heard from other witnesses, many of the practicalities in the programme make it unworkable for many SMEs. The key issues are related to evaluations and, in practical terms, the obligation to issue share options at market value, which creates a compliance burden and a legal risk for SMEs. While guidance was issued, only one paragraph was published and this is creating uncertainty and discouraging many SMEs from engaging with KEEP.

A second issue is the restriction on the total market value of share options offered to an individual to not more than 50% of his or her annual remuneration. In the start-up scene salaries are often relatively low but high risks and high rewards are offered to skilled specialists. While KEEP is intended to facilitate this approach, the restriction to 50% of salary mitigates against it.

Other issues arise but I will address only two of them. First, on the restriction of qualifying individuals to the service of one company, people will often work in a group, even at a start-up level, and they are excluded under this scheme. That has been an issue. A second issue is the decision to confine KEEP to full-time employees.