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EMI Share Scheme

readerreader Experienced MentorMAAT, AAT Licensed Accountant Posts: 1,042
in General accounting discussion
Does anyone know much about this scheme?

I understand the general principles, e.g. issue the employee shares and then the employee sells those shares within 10 years of grant.

However the thing I don't understand is who does the employee sell those shares to?

Does the main owner buy them back out of his own personal funds? Or does the company buy the shares back? Or does the employee sell them to a 3rd party (although this would probably be prevented in the shareholder's agreement)?

Does anyone have any experience of this?

Comments

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    edited February 2018
    i have no practical experience of EMI but have dealt with a non qualifying scheme.
    I expect for the scheme to be attractive for the employee is that there is an expectation that either the company will be bought or become public (and shares MV to increase). For EMI shares it means that the employee needs to sell their shares within a certain period (on top of my head 90 days?) for the shares to remain tax efficient.
    reader
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    MarieNoelle said:

    i have no practical experience of EMI but have dealt with a non qualifying scheme.
    I expect for the scheme to be attractive for the employee is that there is an expectation that either the company will be bought or become public (and shares MV to increase). For EMI shares it means that the employee needs to sell their shares within a certain period (on top of my head 90 days?) for the shares to remain tax efficient.

    Thanks a lot. That makes sense, i.e. the td is bought or goes public.
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    MarieNoelle said:

    i have no practical experience of EMI but have dealt with a non qualifying scheme.
    I expect for the scheme to be attractive for the employee is that there is an expectation that either the company will be bought or become public (and shares MV to increase). For EMI shares it means that the employee needs to sell their shares within a certain period (on top of my head 90 days?) for the shares to remain tax efficient.

    I think the 92 day rule relates to when the EMI scheme has to be registered by. The EMI scheme has to be registered with HMRC within 92 days of the grant of EMI options.

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    Hi @reader
    I was referring to disqualifying events, in my example the company would lose its independence if it was being bought and the employee would have to dispose of the shares within 90 days for the tax treatment to remain advantageous.
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