ENTERPRISE MANAGEMENT INCENTIVE (EMI) SHARE OPTION SCHEME
These are the rules of the Enterprise Management incentive (EMI) share option scheme for [Day][Company Name] (“the Company”). These rules are made in accordance with a piece of legislation called the Income Tax Earnings and Pensions Act 2003 (which is called the “ITEPA 2003 Act” in these Rules)
Invitation to Apply for Options
- 2.1. At any time the Board of the Company (“the Board”) can decide to select people who are Qualifying Employees and invite them to apply for the grant of options to acquire shares in the Company (“Options”). “Qualifying Employees” are directors or employees of the Company who fulfil the requirements for qualifying for a scheme like this one which are set out in Part IV of Schedule 5 of the ITEPA 2003 Act. They must fulfil these requirements on the date that the Options are granted to them. The Options the Qualifying Employees are invited to apply for will be for ordinary £1 non-voting shares in the Company. These shares will be fully paid up (meaning no money is owed to the Company for them other than the amounts the Eligible Employee has to pay to exercise the Options) and are not redeemable (meaning that the company is not able or required to buy them back for cash).
- 2.2 Each invitation will set out:
- 2.2.1 the date by which an application to accept the invitation to acquire Options must be made by the Qualifying Employee(which must be not less than 7 days after the issue of the invitation and not more than 14 days after the issue of the invitation)
- 2.2.2 the maximum number of shares in the Company over which that individual may on that occasion apply for an Option (“Shares), which is up to the Board to decide; and
- 2.2.3 any performance conditions which the individual must fulfil before they can exercise the Options (“Performance Conditions”)
- 2.2.4 the price at which the Shares can be acquired on the exercise of any Option (called “the Subscription Price”); and
- 2.2.5 whether the Qualifying Employee will be required to pay any National Insurance tax liability arising in relation to the exercise of any Options (whether of the individual or the Company) and, if so, how the employee will need to pay back the Company for any such liability.
- 2.3 Each invitation will be accompanied by an application to accept it in such form, as the Board can decide, as long as the form is consistent with these Rules.
- 2.4 The Subscription Price will not be less than the base value of a Share at which it is originally issued (sometimes called its “nominal value”)
Applications for Options
- 3.1 Not later than the date specified in the invitation each Qualifying Employee to whom an invitation has been issued in accordance with Rule 2 above can apply to the Board, using the application form supplied, for an Option over a number of Shares which must not be greater than the number specified in the invitation.
- 3.2 Each application must be accompanied by a payment of £1 in return for the Option to be granted.
Also included in this document:
4. Grant of Options
5. Exercise of Options
6. Takeovers and Liquidations
7. Changes in Share Capital and other “Disqualifying Events”
8. How to Exercise of Options