When setting up an enterprise management incentive (EMI), there are a number of potential pitfalls to be aware of. On the adoption of an EMI plan, it should be registered online with HMRC via the PAYE portal in good time. The requirements for qualifying companies should be reviewed to ensure that a qualifying trade is undertaken on a commercial basis with a view to making profits and does not, to a substantial extent, consist of certain excluded activities. The option documentation must set out the restrictions attaching to shares; and a signed working time declaration from the option holder is key. When undertaking a rollover of EMI options, the new options must be over shares in the acquiring company itself.
