ETASSUM55010 - Enterprise Management Incentives (EMI): Company reorganisations: Meaning of company reorganisation

Paragraph 39, Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

If a company whose shares are the subject of qualifying options is taken over or merges, it loses its independence. This is a disqualifying event unless the company taking over or merging with the EMI company, the acquiring company, grants a replacement option in exchange for the qualifying option within six months.

This can occur when the acquiring company:

• obtains control of the EMI company by making a general offer to acquire the whole of the issued share capital of the company or to acquire all the shares which are of the same class as the option shares,
• obtains control of the EMI company or as a result of a compromise or arrangement sanctioned by the court under section 899 or 901F of the Companies Act 2006,
  • Any change to a scheme’s rules to include the new rights provided by 901F Companies Act 2006 will apply to existing options, including those granted before 26 June 2020 as well as any options granted since then.
• becomes bound or entitled to acquire the shares of dissenting shareholders under sections 979 to 982 of the Companies Act 2006, or
• obtains all the shares of the EMI company as a result of the interposition of a new holding company and a qualifying exchange of shares.