My client is a tech sector company (TechCo) which was established in 2012. EMI options over 10% of the company were granted to key employees in 2013. At the time the company was not recording any earnings and its balance sheet looked desolate. It was agreed with HMRC that the market value of the EMI shares was no greater than their nominal value of 1p each which was set as the options’ exercise price. None of the options have been exercised. An established company based in the US (USCo) now proposes to buy TechCo for £8m through one of its UK subsidiaries (UKSub). USCo has suggested that it will cash-settle the options to save having to go through the process of exercising the options. What should TechCo consider in evaluating this element of the offer?
This is a common...
