ETASSUM26140 - Schedule 2 Share Incentive Plan (SIP): Requirements relating to the trust and trustees of a Schedule 2 SIP: Trustees' optional powers

Under the SIP Code, the trust deed may allow the trustees various powers. »Ê¹ÚÌåÓýapp following examples are expressly mentioned in Part 9 of Schedule 2:

Power to borrow

»Ê¹ÚÌåÓýapp trustees may be permitted to borrow:

  1. to acquire shares to be used as Schedule 2 SIP shares, and
  2. for other purposes as specified in the trust deed (paragraph 76).

»Ê¹ÚÌåÓýapp deed may require the amount and terms of any borrowing to be agreed with the company or it may leave this to the trusteesâ€� discretion â€� this is a matter for the parties to decide.

Power to raise funds to subscribe for shares under rights issues

Subject to the duty to act in accordance with a participant’s directions under paragraph 72(1) (see ETASSUM26110), the trust deed can permit the trustees to dispose of some of the rights arising under a rights issue in order to obtain sufficient funds to exercise the rest of the rights (paragraph 77(1)). This practice is known as tail swallowing and ETASSUM25140, ETASSUM25150 & ETASSUM25160 provide further information.