Unlike for EMI Options, Unapproved Options do not require a Valuation to be agreed with HMRC before agreements are signed, although people do sometimes carry out an unofficial Valuation to make sure their employees are getting the most out of these options.
The first step is to authorise the option pool on the platform. Once this is done, you're ready to distribute.
First, log onto the platform and go to your Dashboard.
Here, under EMI & Options click View & Distribute:
Then click Distribute an unapproved option.
Which will take you to this page.
Since this is an Unapproved Option, it can be issued to a Company, or an individual, whether or not they are a UK based employee.
Select Individual or Company underneath Recipient details. If you choose Individual, you will see this:
Enter the recipient's legal name and email. You will need to select whether or not they are a UK employee. This is important as it will affect whether or not they are included in your Annual Notifications to HMRC.
If they are a UK employee then you will be prompted to enter their NI number. This is very useful to have and will make things much simpler down the line, as it will be used on many occasions to automatically fill forms for HMRC:
If you choose Company, you will see this, and will need to enter the name and contact email:
For the Company name, please enter the name exactly as it is found on Companies House. This will save some hassle later on.
Next, scroll down to complete the Shares section.
You will need to fill in:
Almost there! Now you need to set the Vesting Schedule (if you want to set one).
If you choose not to use one and not to have the shares vest automatically, vesting of the options will be entirely manual, and in your control.
You will still need to set a final vesting date.
If you do choose to use a vesting schedule, the page will look slightly different:
The Cliff Date and Cliff Shares part might sound confusing. All it means is this: the Cliff Date is the date when the recipient will have their first set of Options become vested. The number of Cliff Shares defines how big this first set of Options is.
The Vesting Frequency is how often the Options vest after that, in equal amounts. You will be able to customise and edit this later.
If you leave all of these blank, and only fill in the Final Vesting Date at the bottom, all of the recipient's options will vest on this date.
If you select Yes under Automatic Vestin, the recipient will be informed automatically when the time comes. If you choose No, then you will have to inform them manually.
Once this is done, just click Save at the bottom of the screen (don't worry, nothing is being sent out just yet):
You will be at the Summary page. Go through the details here, if you need to change anything just click the Edit button in the top right, which will take you to the previous page.
This page will also show you the vesting schedule:
The platform will automatically split the shares remaining after the Cliff Shares into equal tranches until the Final Vesting Date.
You can, however, customise it. Just click Edit on the tranche you want to change:
And it will take you to this page.
Here, you will be able to change the number of shares, and the date this tranche will vest.
Back on the top right of the page, you will need to upload a copy of your Company's articles of association if you have not done so already, and then invite the recipient to accept their Options. The platform will produce all relevant paperwork.
Once you are happy, just click Save. On the Agreement Summary page, click Send Invite, and you're all done!
Provided you haven't yet sent the invite, if its all gone wrong and you want to start again, just click Delete at the bottom of the page and try again: