I'm doing some work for a client at the moment with a view to setting up an EMI share option scheme.
The manager to benefit from this is querying how much control he will have over the scheme. Specifically, whether once it's in place he can exercise his option at will without the consent of the majority shareholders.
I presume that with the necessary shareholders agreements in place the contract has the force of law and the majority shareholders cannot block the issue if in line with the agreement.
Am I correct in this? Anything else I should bear in mind?
Also, is there anywhere you can get templates for appropriate shareholders agreements and contracts etc.?
Thanks,
Andy.
Andy
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EMI
Dear Andy
This depends entirely on the wording of the EMI Agreement - one of the virtues of the EMI is its flexibility.
The terms of the option, including any performance conditions, have to be set out in the written Option Agreement, but those conditions do not have to be objective - they could for example include something like ..."the option holder must have performed his duties in a satisfactory manner"..., which would be tantamount to giving his manager a veto on the exercise of the option. I would not recommend such a vague condition - I am simply saying it is possible.
As for templates for the agreement, I am not aware of any - and if you find any, beware, as again the virtue of the scheme is how flexible it is.
I have set up several EMI schemes, and the Option Agreements have been very different in each case, depending on the client's needs.
James Bailey
Chartered Tax Adviser
[email protected]