What information should go in an EMI option agreement?
Some of the details needed in an EMI option agreement are self-explanatory – typically, these details include the number of options granted, the date of grant, and the name of the optionholder. HMRC’s website has a useful summary here: EMI options - terms to be included.
It’s also important to let the optionholder know about the shares over which options are to be granted and whether the shares have any particular rights or restrictions. This might involve explaining that the shares don’t have voting rights, but do pay dividends.
Sometimes there are details in the company’s articles of association (or, sometimes, a shareholders’ agreement) that affect the shares. These should also be drawn to the optionholder’s attention when the option is granted. This might be in the option agreement itself or it might be in separate explanatory documentation. A common example would be whether shares have to be sold when an employee ceases employment, and the price that they might receive for the shares.
If the company might make changes to its share capital or articles of association after options have been granted, optionholders should be told as soon as possible about any changes that might affect their option shares.
If you’re not sure what needs to go in your EMI option agreements, contact us on 020 8949 5522 or by email email@example.com. Alternatively you can consult our free fact sheet downloads for more information.