GLOSSARY

EMI scheme definition

What does EMI scheme mean?

An Enterprise Management Incentive (EMI) is an employee share option scheme, approved by HMRC. EMIs are very similar to company share option plans (CSOPs) that they enable the employer to reward selected employees with tax advantaged share options. Under an EMI, a company will grant options to an employee. The share options give the employee the right to buy shares within a specified period at a fixed price. It is up to the employer to set the minimum exercise period, but in order to qualify as an EMI, the options must be capable of being exercised within ten years of grant. When the employee exercises his option, he will acquire shares at their agreed option price. Where the exercise price is equal to or more than the market value of the shares at the date the option is granted, there will be no income tax on exercise. The only tax usually charged on the employee will be capital gains tax when the employee eventually sells his shares.


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