EMI

Enterprise Management Incentive

EMI, (Enterprise Management Incentive), is an HMRC-approved tax advantaged employee share option scheme, which leads to employees becoming shareholders in your company.

Benefits

The aim of an EMI is to reward and incentivise key employees: by awarding them share options in the company.

In companies where cash is tight, shares or share options can be an important part of a remuneration package, helping to attract high calibre employees.

In companies where cash is tight, shares or share options can be an important part of a remuneration package, helping to attract high calibre employees.

Employee share ownership is considered to help align the interest of the company’s owners with that of employees: to increase shareholder value through growing the business.

Quality assurance

Our in-house tax expert is supported by specialists around the country in our UK200 network with proven experience in his field.

What we can do?

We can help you decide if your company or employees qualify for such a scheme, discuss whether options should be based on targets, the type of share to be made available and what to do about leavers. And guide you through the formalities of establishing a scheme, including notifying HMRC and agreeing the market value of shares with them.

How much is it?

This will depend on the complexity of the scheme, whether the company’s Articles of Association and any shareholders’ agreements need amending, considering employees’ contracts of employment and so on.

FAQs

What do you mean by “share options”? A share option is a right to acquire shares in a company on terms set out in an option agreement, such as the number of shares an employee may acquire, how much will have to be paid for them and when the option can be exercised.

Should employees have shares or share options? Whilst it sometimes makes sense to give shares to employees from the outset, there can be tax consequences if the employee does not pay market value. Many companies prefer not to give shares because of complications should an employee leave.

Who can received EMI options? At the company’s discretion, they can be granted to a “qualifying” employee in a “qualifying” company, up to a maximum of £250,000 per employee , £3 million for the whole company. Many companies issue options only to employees who have minimum period of employment or who meet performance targets.

When would the options be exercised? The options must be capable of being exercised by the employee within 10 years; and it is quite common for them to be exercised on the sale of the company.

Do I need to use a solicitor? Given the cross-over with company law, for example, when referring to the company’s Articles and shareholders’ agreements, we would never advise against taking legal advice.