The Importance of Good Record Keeping

Ensuring the implementation of any employee share scheme is an essential component in its success. However, taking care to ensure the administration is permitted the same level of detail is also of paramount importance.

Errors in scheme administration can expose an organisation to significant financial risk, not to mention potentially jeopardising the very relationship they are designed to enhance, that between employer and scheme participant.

It is therefore crucial for companies administering employee share schemes to take the necessary precautions to guarantee they are doing so correctly. The key areas for consideration are: What records need to be kept? How often should they be updated? And who will be carrying out this task?

What records need to be kept?

It is critical that the following information should be kept in respect of all scheme participants:

  • participant’s name;
  • participant’s National Insurance number;
  • name of the employing company;
  • relevant tax office;
  • tax office’s reference number;
  • country of tax residence; and
  • whether the participant is a director or not.

In respect of options granted or share awarded, the subsequent information is required:

  • name of the plan;
  • type of plan the equity was awarded under (i.e. EMI, SIP, DSPP, etc.);
  • number of options granted or shares awarded;
  • date of grant/award;
  • exercise price or value at award;
  • a note as to whether options were granted, or shares awarded, at a discount to market value; and
  • details of any performance conditions.

How often should they be updated?

Both HMRC tax-advantaged and non-tax-advantaged schemes require the completion of specific online forms on an annual basis. Therefore, it is highly recommended records are updated regularly on a monthly basis to track any changes, such as the exercise of options or a participant leaving. An attentive approach will ultimately save time and make scheme administration a much more manageable task.

Keeping scheme records regularly updated can also benefit other parts of the organisation. For example, an option register would be of use to an organisation’s finance department in order to prepare accurate statutory accounts, or a company secretary may need up to date records to ensure there are sufficient authorised and unissued shares available for future exercises of options.

Who will be carrying out this task?

The way in which records are maintained will depend upon the complexities of the scheme and the number of participants in it. The company will have to deliberate whether anybody in-house has the relevant experience and expertise to ensure that the scheme is administered appropriately.

If there is any uncertainty around this or if there is no suitable candidate, contact us at the RM2 Partnership on 020 8949 5522 or via As highly experienced professionals in the field of employee share schemes and plan administration, we are well equipped to meet the needs of your organisation and keep your schemes complicit, compliant and effective.