The following Share Incentives practice note provides comprehensive and up to date legal information covering:
EMI Review: In the Spring Budget 2020, the government announced that it will review the EMI scheme to ensure that it provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively, and to examine whether more companies should be able to have access to the scheme. This suggests that the government may be considering less restrictive eligibility criteria for companies who wish to offer an EMI scheme, therefore potentially increasing the number of companies who qualify to operate EMI schemes. See News Analysis: Spring Budget 2020—Tax analysis.
Not realising a disqualifying event has occurred is one of the most common reasons why unintended income tax and National Insurance contributions (NICs) (employer’s and employee’s) may become payable on the exercise of enterprise management incentives (EMI) options. Therefore, EMI eligibility is not just based on a snapshot of the company at the time the scheme is launched but requires ongoing monitoring.
This Practice Note examines the following:
what are the consequences of a disqualifying event:
on a market value EMI option, and
on a discounted EMI option?
what are the disqualifying events:
relating to the company
relating to the employees
relating to varying the terms of the option
relating to the alteration of share capital
relating to share conversions, and
relating to granting options pursuant to company share option
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