Most independent trading companies with gross assets below £30m and fewer than 250 full-time employees can grant EMI share options to their employees. All employees who are employed for at least 25 hours per week are eligible and those employed on fewer hours can also qualify if they spend at least three-quarters of their working time in the business. Usually EMI share options are reserved for key employees who can help drive growth.
EMI share options give recipient employees the right to acquire shares in the Company at some time in the future. The Company has a great deal of flexibility in setting the terms of an EMI share option: shares can be acquired very soon after grant or after a designated period of time, or linked to the happening of a particular event such as a sale of the Company. The Company can make the options subject to performance conditions which can ensure that shares are only received if certain targets are achieved, and provisions can be included to deal with what happens if an employee option holder leaves the Company.
A particularly useful feature of EMI share options is that they can be granted over any class of ordinary shares. This means that an entirely new class of shares, separate to the existing shares in issue, can be created specifically for employee option holders. The new class of shares could have different economic returns and perhaps little or no voting rights.
Julian Moran leads the Tax team at Lupton Fawcett. He has been advising on business tax matters including EMI share option schemes since qualifying in 2002. Julian is based in our Leeds and York office. Sarah Illidge is a senior solicitor specialising in tax, and is based in our Sheffield office. Our Tax team is very experienced in all aspects of EMI share options.
Contact Us for Help
If you would like to discuss setting up an EMI share option arrangement or you would like us to review or update your existing share option scheme, please contact our Yorkshire offices by calling 0333 323 5292, or alternatively, fill in our enquiry form and a solicitor from our Tax Team we will get back to you as soon as possible.