How EMI schemes work and key features
How EMI schemes work and key features

The following Share Incentives guidance note provides comprehensive and up to date legal information covering:

  • How EMI schemes work and key features
  • What are EMI options?
  • The law governing EMI options
  • EMI options and EU State aid approval
  • Eligibility requirements
  • When can EMI options be exercised?
  • When do EMI options lapse?
  • Are there any restrictions in regard to the terms of an EMI scheme?
  • Amending the terms of an EMI scheme
  • Tax treatment of EMI options
  • more

The Practice Note covers the following topics and questions:

  1. what are EMI options?

  2. the law governing EMI options

  3. the eligibility requirements:

    1. which companies can grant enterprise management incentives (EMI) options?

    2. who can be granted EMI options?

    3. which shares can EMI options be granted over?

    4. what must the exercise price be?

    5. are there any limits on the grant of EMI options?

  4. when can EMI options be exercised?

  5. when do EMI options lapse?

  6. are there any restrictions in regard to the terms of an EMI scheme?

  7. amending the terms of an EMI option—possible pitfalls

  8. tax treatment of EMI options:

    1. income tax and National Insurance contributions (NICs) treatment

    1. capital gains tax (CGT) treatment of EMI options

  9. disqualifying events

  10. exchange (rollover) of EMI options

  11. valuation of EMI options

  12. advance assurance

  13. notification process

  14. annual returns, and

  15. EMI options and corporate transactions—practical considerations

What are EMI options?

The EMI scheme is a highly flexible and tax-efficient share option scheme designed specifically for small/medium-sized businesses. EMI schemes, which were first introduced under the Finance Act 2000, are one of the most popular of the share option schemes available to companies.

EMI options must be granted for commercial reasons in order to recruit or retain an employee in a company, and not as part of a scheme or arrangement the main purpose (or one of the main purposes) of