Jurisdiction(s):
United Kingdom

Key definition

Share option definition

What does Share option mean? A share option is a contractual right to buy (and less commonly to sell) shares at a fixed or formula-based exercise price within a stated period or on specified events. In practice it is a call option over shares, granted either by the company (over unissued shares) or by an existing shareholder (over issued shares). The option gives the holder a right, not an obligation, to acquire the shares; if not exercised before expiry it lapses. The term is descriptive rather than defined in statute or case law, although particular employee share option schemes are defined for tax...

UK EMI Share Options Term Sheet: Template and Key Legal, Tax and Commercial Issues

Published by a LexisNexis Share Incentives expert

Precedents

This Term sheet outlines a plan to motivate key staff of [ insert name of company ] (the ‘Company’) through the award of statutory tax-advantaged Enterprise Management Incentive (EMI) Share Options over the Company’s Shares (‘EMI Options’). All matters raised here are for discussion only and should be considered carefully before any implementation.

1 Overview

The EMI scheme is a very adaptable and tax-efficient share option arrangement designed specifically for small/medium-sized businesses. EMI is among the most popular share option schemes available to companies. EMI Options must be granted for genuine commercial reasons to recruit or retain an employee, and not as part of any scheme or arrangement where the main purpose (or one of the main purposes) is the avoidance of tax. Under this proposal, participants will be granted EMI share options with an Exercise price set at the date of grant. The EMI scheme operates on a discretionary basis...

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Web page updated on 27/05/2026

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