Q&As

Could the sale of a minority interest in a company to a corporate investor prevent the company from granting new enterprise management incentives options?

read titleRead full title
Published on LexisPSL on 25/02/2020

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

  • Could the sale of a minority interest in a company to a corporate investor prevent the company from granting new enterprise management incentives options?

Various statutory requirements need to be satisfied by a company in order for it to qualify to grant enterprise management incentives (EMI) options. For further details, see Practice Note: EMI—qualifying companies.

Assuming that the company has been able to satisfy these EMI requirements to date, key issues to consider regarding the sale of a minority shareholding to a corporate investor will be:

  1. whether the corporate investor is connected with any of the existing shareholders in the company and/or

  2. whether the terms of the minority sale will mean that the EMI company will become a 51% subsidiary of the investor company (by virtue of holding more than 50% of the nominal value of the shares) and/ or give the investor the ability to acquire control of the company in the future

The EMI statutory criteria include a requirement that, in order to qualify to grant EMI options, a company must:

  1. not be a 51% subsidiary of another company, or

  2. not otherwise be under the control of another company, or of another company and any other person connected with that other company

Although the company c

Related documents:

Popular documents