It is designed to help high risk companies who need to offer substantial rewards to attract high quality staff - often from what might seem secure positions. The employee is granted an option and then submits details to the Revenue to ascertain whether they will give it EMI status. Crucially the Inland Revenue have discretion to reject EMI status if it thinks the option is not granted for commercial reasons to recruit or retain a key employee in a company. While it should be fairly certain when an option is needed to recruit new staff, it may be more difficult to convince the Revenue the option was truly needed to retain staff. However, EMI is probably worth thinking about because even if the option fails to attract EMI status, it can still operate as an unapproved option.
Exit Routes Putting shares into employees' hands is only half the story.
The more difficult part is enabling them to convert those shares into cash. In the absence of a trade sale or flotation, you need some form of internal market. The usual problem is liquidity. Our experience shows if you set up purchase and sale arrangements amongst staff, you usually end up with more potential sellers than buyers. But an All-Employee Share Ownership Plan could provide the answer as explained in our Summer 2000 Employment Update .