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 enquiries@rm2.co.uk. Alternatively you can consult our free fact sheet downloads for more information.