A description of the process to follow when an employee with EMI options leaves the company
What you need to do on an employee leaving the business depends on the terms and conditions contained within their option agreement. This article lays out the process for companies that are using the standard Vestd EMI agreement.
The EMI agreement's default position is that all EMI options will lapse once an employee leaves the business unless the Board says otherwise, in which case it can apply whatever conditions it wants, or unless otherwise specified in the Schedule of the agreement.
As a backstop, the option will lapse 16 weeks after the employee leaves the company, but will cease to be exercisable (if it was exercisable) as soon as the individual ceases to be an employee.
Unless specified otherwise in the Schedule, within the 16 weeks the Board can decide whether to allow the individual to keep the options in full or in part, whether they can be exercised immediately or not at all. Only if they are exercised within 90 days of ceasing to be an employee will they maintain full EMI tax treatment. If they are not exercised in that time period, any subsequent gains in value from that point will be liable for income tax when they are eventually exercised.
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