Q&As

Can an option over newly issued shares still be enterprise management incentives (EMI) qualifying if there is no exercise price payable?

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Published on LexisPSL on 10/12/2019

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Can an option over newly issued shares still be enterprise management incentives (EMI) qualifying if there is no exercise price payable?

The legislation governing enterprise management incentives (EMI) schemes does not require that an exercise price must be payable in relation to an EMI option (although it should be noted that income tax will be payable on the exercise of a qualifying EMI option to the extent that there is no exercise price payable, or the exercise price is otherwise less than the actual market value of a share on the grant date of the option).

However, when granting an EMI option with a nil cost exercise price, the arrangement must be structured with care as the legislation governing EMI schemes requires that, at the time that the option is granted, the option must confer a right to acquire shares that are fully paid up. The EMI legislation also stipulates that shares are not fully paid up for EMI purposes if th

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