Q&As

Is a written resolution required on the grant of enterprise management incentives share options?

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Published on LexisPSL on 30/01/2019

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

  • Is a written resolution required on the grant of enterprise management incentives share options?

It is assumed that this Q&A is referring to a written resolution of a company’s shareholders, rather than its directors.

When establishing an enterprise management incentives (EMI) scheme, shareholder resolutions may be required for many reasons, including to approve the scheme, to authorise the grant of rights to subscribe for, or to convert any security into, shares in the company (option rights) or the allotment of shares in the company and/or to disapply any pre-emption rights in relation to such grant or allotment. It will vary depending on the circumstances of the case.

A private company limited by shares can pass a shareholder resolution as a written resolution in accordance with the procedure prescribed in Chapter 2 of Part 13 of the Companies Act 2006 (CA 2006) or at a general meeting of its shareholders. Any other company must hold a general meeting of its shareholders in order to pass a shareholder resolution.

CA 2006 provisions that may apply on the grant of EMI options require the company to have authority to grant option rights or allot shares under CA 2006, s 549 and to first offer any equity securities to be allotted to its existing shareholders in accordance with CA 2006, ss 560–561 (ie giving those existing shareholders statutory pre-emption rights). It should be noted that for the purpose of CA 2006 provisions applying pre-emption rights

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