Q&As

What are the implications of granting a non-executive director a share option pursuant to an enterprise management incentives share option scheme?

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Published on LexisPSL on 15/09/2020

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

  • What are the implications of granting a non-executive director a share option pursuant to an enterprise management incentives share option scheme?

Enterprise management incentives (EMI) share options can only be granted to employees of the relevant company or its qualifying subsidiaries paragraphs 26–27 of Part 4 of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).

If a share option was granted to a non-employee (such as a non-executive director (NED)) it will not qualify as a 'Schedule 5 EMI option' and will instead be treated as an unapproved share option and be taxed accordingly. For further details, see Practice Notes: Unapproved share options and Unapproved share options—tax treatment.

As regards the EMI qualifying status of the relevant option scheme and any other options granted under that EMI scheme, the grant of a share option to a NED should not im

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