Strategy Case Study

The client was a London advertising agency which needed to retain five key staff to ensure the value of the business increased with a view to sale in five years time.

We provided the advice and then implemented an EMI (Enterprise Management Incentive scheme) which included:

Review of shareholders agreement and articles of association to ensure an EMI could be constitutionally implemented.

Sub-division of current £1 par value shares to 1p shares to provide greater flexibility in granting options over precise percentages of holdings.

Tax valuation of the business – agreed with HMRC.

All EMI documentation including share option agreements, generic share scheme rules, board minutes to adopt share scheme with appropriate resolutions, and option certificates.

Employee pack of FAQs and specific illustrations of each employee’s tax position.

Notification to HMRC of the grant of options.

Annual completion of EMI return (form EMI 40).

The process took three months and the client was kept appraised throughout with regular meetings. The employees were also part of the process as we advocated an open approach with the option holders, particularly essential as they are the future shareholders.

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