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EMI Share Option Guide

Qualifying Conditions

There are a number of conditions that must be satisfied for an option to qualify as an EMI option including the following:

  1. Commercial Reasons

    The option must be granted for commercial reasons to recruit and retain employees and not as part of a scheme to avoid tax.

  2. Independence

    The option shares must be in an independent company that has gross assets not exceeding £30 million.

  3. Trading Companies

    The company must carry on a trade wholly or mainly in the UK on a commercial, profit-making basis which does not, to a substantial extent, include various excluded trading activities.

  4. Maximum Employees

    The company must have fewer than 250 employees.

  5. Options over Ordinary Shares

    The option shares must be fully paid up ordinary shares which carry the right to participate in any dividends that are declared by the company.

  6. Non- Redeemable Shares

    The shares over which options are granted must not be redeemable.

  7. Employee Working Hours

    The employees to whom the options are granted must work at least 25 hours per week for the company or, if less, at least 75% of their working time.

  8. Non-Material Interest in the Company

    Employees to whom the options are granted must not have a material interest of 30% or more in the ordinary share capital of the company.

  9. Maximum Value per Employee

    No employee can hold options over shares with a value exceeding £250,000 as at the date of grant.

  10. Exercised within 10 years

    The options must be capable of exercise within ten years of the date of grant.

  11. Maximum Total Value

    The total value of shares in the company over which unexercised options exist cannot exceed £3 million.

  12. Option Agreement

    The option must be granted under a written agreement between the company and the employee or pursuant to a share option scheme.

  13. Notify HMRC

    The grant of an option must be notified to HMRC within 92 days of the date of grant.

Companies may submit details of the company to HMRC Small Company Enterprise Centre (SCEC) for advance assurance on whether the company will be a qualifying company for the purposes of the EMI legislation. SCEC will not give advance assurance in respect any of the other qualifying conditions.


Companies wishing to grant EMI options will need to value the shares over which the options are to be granted as at the date of grant. They will need to contact HMRC Shares and Assets Valuation (SAV) for this purpose. Companies can either offer their own valuation or they can ask SAV to agree the valuation with them. The value to be attributed to the shares is the price that they might reasonably be expected to fetch on the open market.

Terms of Option

The EMI Option Agreement or Scheme rules must include the following terms:


The date of grant.


That the option is granted under the EMI legislation.


The number or maximum number of shares over which the option is granted.


The price (if any) that the employee must pay on the exercise of the option or a mechanism for determining the price.


When and how the option can be exercised.


Any performance or other conditions that must be met by the employee.


Any restrictions on the shares, such as a risk of forfeiture.

If you would like further information or require assistance in respect of the grant of EMI Options or the establishment of an EMI Scheme then please do not hesitate to enquire here.

From £750    ( £900.00 inc. VAT)
Please contact us for a fixed quotation.


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