How to grant EMI options
Step 1 is for the Directors’ of the company to provide permission for options over the shares in the company to be granted. If you have standard model articles this can be done by passing a Directors’ resolution.
However you may need to pass a shareholder’s resolution as well if you have customised articles which mean shareholders need to give permission for options to be granted. The need for a shareholder’s resolution is most commonly seen in companies which have received Series A+ funding rounds. If you are unsure if you need a shareholder’s resolution then you can consult with Pett Franklin.
Step 2 is to check that the company meets the criteria to be a qualifying company. You can check the requirements on the TechFranklin Docs page. If you are unsure if you qualify then you can consult with Pett Franklin.
Step 3 of obtaining a tax valuation is not strictly needed but is strongly advised. Essentially a UMV and AMV per share is pitched to HMRC and two weeks later (although it can take longer) HMRC will respond with written confirmation agreeing to the valuation. The valuation agreement from HMRC is valid for 120 days from the date of agreement. If you need an EMI valuation then Pett Franklin can provide this to you.
Step 4 is to design the options. The main things to determine are which employees will receive options and
- The share class under option (if you have more than one class of share)
- Number of shares under option
- Exercise price
- Exit only
- Good leavers
- Time based vesting
- Performance conditions
If you’d like to learn more about EMI options then contact us via: