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Which companies qualify for EMI? 

Qualifying companies

A company can be quoted or unquoted.

It must:

  • Be independent (not a 51% subsidiary of another company or controlled by another company or a company and persons connected to it).
  • Have gross assets of less than £30 million.
  • Have fewer than 250 full-time employees.
  • Have only qualifying subsidiaries: a company must hold more than 50% of the ordinary share capital of any companies it acts with; so joint ventures can sometimes be problematic.
  • Have a permanent establishment in the UK: a fixed place of business or an agent concluding contracts on its behalf
  • Satisfy the qualifying trade test: must exist wholly or mainly for the purposes of carrying on a qualifying trade or be preparing to do so; a qualifying trade is a trade carried on wholly or mainly in the UK on a commercial basis with a view to profit that does not consist to a substantial extent of certain "excluded activities".  
  • Excluded activities for EMI are the same as for EIS (see EIS article here)

Qualifying shares

Shares subject to the plan must be fully paid-up, non-redeemable ordinary shares in the company; any restrictions attaching to the shares must be notified to participants in the option agreement/or option agreement linked to articles.

Eligible employees

To be eligible, an employee must work for the relevant company for at least an average of 25 hours per week or, if less, 75% of the employee’s working time.

An employee who controls, directly or indirectly, more than 30% of the ordinary share capital of the company cannot be granted an EMI option.

The purpose test

Options must be granted for commercial reasons in order to recruit or retain an employee and not as part of a tax avoidance arrangement.


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