Enterprise management incentives (EMI) qualification questionnaire
Published by a LexisNexis Share Incentives expert
Last updated on 28/07/2020

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

  • Enterprise management incentives (EMI) qualification questionnaire

Enterprise management incentives (EMI) qualification questionnaire

Enterprise management incentives suitability questionnaire in respect of [insert name of company] (the Company)

The Company

Purpose of granting the options

QuestionResponse
1It is a requirement that the EMI options are 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 which is the avoidance of tax.
Please confirm that whether this is the case.

See drafting note

The Company’s independence

QuestionResponse
2Is the Company a 51% subsidiary of another company (ie does another company hold more than 50% of the ordinary share capital of the Company)?

See drafting note

QuestionResponse
3Is the Company in any way under the control of another company or another company and person(s) ‘connected’ with that other company (ie does another company, or another company and persons connected with that other company, have the power to ensure that the Company’s affairs are conducted in accordance with its wishes)?
‘Connected’ for these purposes has a wide meaning and encompasses interests held by a spouse, relative, settled trust etc.
Please provide details on the Company’s current shareholders and any expected future changes in its shareholding.

See drafting note

Related documents:
Key definition:
Subsidiary definition
What does Subsidiary mean?

There are two suggested definitions for the term 'subsidiary', as commonly used in agreements. CA 2006, s 1159 provides that a company is a holding company of another company (its subsidiary) if it satisfies one of three tests, two of which require it to be a member of the other company (as well as to possess certain rights, which go to its voting powers). Membership of a company is a question of fact and the court has found that if a company (company A) has transferred shares in another company (company B) to a lender in connection with the taking of security and the name of that lender or the lender’s nominee has been entered in the register of members, then company A is not a member of company B in respect of those shares: see Enviroco Ltd v Farstad Supply A/S.

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