Enterprise Management Incentive Scherme

[TDIPLC]

Hello,



Our company has a culture of rewarding and incentivising key personel by allwoing theem to own shares or have options to buy shares in the firm.



It has been recommended that we apply for an EMI scheme which enables this to happen whereby the company and the employee pay only 10% tax on any capital gain (subject to rules).



I understand the structure and what needs to be done, but I was wondering whether any PH'ers have done this and encountered any issues?



Thanks



Mark

[wattsm666]

Mark,



You accountants should be able to advise on the implications and assist in the setup. If not send me a mail as my firm (Haslers) can deal with this and run through the issues.



Michael

[TDIPLC]

Thanks very much Michael - much appreciated

I understand how it all works, so was hoping to find out about any negative aspect that people had experienced (if any)

Thanks again

[wattsm666]

I can't think of any negative aspects, other than more returns to HMRC - but that is only minor!

You need to ensure the rules cover things like employees leaving, disability (what do you want to happen - do they lapse or can they carry on), death (do the family have the right to exercise within a given timescale), what are the triggers (sale, profit, turnover). The triggers can be different for each individual that is granted options.

Hope this helps.

Regards,
Michael

[TDIPLC]

First class reply Michael.

Thank you very much again

Mark

[wattsm666]

One final thought - you can end up arguing the value of the shares with HMRC. You will want them as low as possible, so that you employees benefit, which will mean agreeing the price/earnings and then the discount for a minority holding.

[Mx_Stu]

Hi Mark,

I work in exec compensation and specifically share schemes. I have spent the last 6 months working solely on EMI schemes. The EMI scheme is indeed a great scheme.

A couple of things I would suggest is getting advance approval from HMRC that your Company is a qualifying company (to avoid any 10% to 50% tax scares further down the line) and when you find an accountants/ lawyers to draft the scheme run as many scenarios past them as possible to ensure that eveything is covered.

If you have any questions feel free to give me a shout.

Stu

P.S. If you've been awarding options/ shares under other schemes remember your Form 42 - due by 6 July....

[TDIPLC]

Thank you very much Stu and Michael

The scheme is being put to HMRC for an informal review, so hopefully all will be OK.

It sound like there are no negative effects then.

Thanks again