| Financial Benefits to Encourage Employee Participation |
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main purpose of which is the avoidance of tax. With limits of 15 employees and £100,000 per employee181 the company may grant up to £3 m (originally £1.5 m) of these EMI share options. Where an employee holds options over £100,000, EMI treatment will apply to the first £100,000. The £100,000 limit applies to a 3 year period beginning with the date of the grant; so if an employee is given £100,000 of share options in the first year and exercises them in the third year, no new options may be taken out until year 4 when the third anniversary of the grant comes round. |
This scheme is meant to apply to small high risk companies. The company must be a qualifying company,182 ie one which is an independent183 trading184 company with gross assets not exceeding £15 m.185 The company may be listed or unlisted but must meet qualifying conditions and in particular must not be involved in certain prohibited types of trade.186 The receipt of substantial sums by way of royalty or licence fee will disqualify a company, unless the intellectual property rights were created by the company or another group company.187 The trade must be carried on in the UK but the company need not be resident here.188 Only qualifying companies can form a group; only the parent can grant EMI options. Subsidiaries will prevent the parent from granting EMI options unless each subsidiary meets all these requirements.189 The relief also applies to a company carrying on activities of research and development from which it is intended that a qualifying trade will emerge.190 |