Dáil Éireann Debate, Wednesday - 6 December 2017
99. Deputy Niall Collins asked the Minister for Finance if a company is permitted to scale up beyond the SME headcount level of 250 employees and remain eligible for the scheme under the criteria laid down by the Finance Bill 2017. [52282/17]
Amharc ar fhreagraThe ‘Key Employee Engagement Programme’ (KEEP), introduced in Budget 2018, has the objective of supporting Small and Medium Enterprises in Ireland in competing with larger enterprises to recruit and retain key employees. Smaller and/or younger companies with growth potential may not have the cash resources available to offer comparable salary packages to large, established businesses. However, where the employee believes in the growth potential of the firm, and by extension the potential for the company shares to increase in value, remuneration in the form of share options may improve the attractiveness of the SME employment offer.
The Deputy's question refers to the KEEP qualifying criteria, specifically the requirement that the company must be an SME company. After the publication of the Finance Bill in October, it was identified that the legislation, as originally drafted, could have had the unintended consequence of incentivising a company not to grow beyond SME size throughout any period in which KEEP share options had been issued by the company but not yet exercised by the employee(s).
In order to correct this issue, technical amendments were brought forward at Report Stage of the Finance Bill. The definition of "qualifying company" was amended to specify that the conditions relating to the SME size requirement and the cap on the maximum value of issued but unexercised qualifying KEEP options are to apply only at the time of the granting of KEEP share options.
Therefore, where a company that has issued KEEP share options subsequently grows beyond SME size, it will no longer be able to issue new KEEP options, but any KEEP options issued while the company was a qualifying SME will continue to be treated as KEEP options.
This amendment will ensure that the programme operates as intended to support the recruitment and retention of employees by SME companies, while also ensuring that the KEEP scheme does not create an unintentional bias against growth beyond SME size in the period in which KEEP share options are on issue.
