EMI options expire 90 days after the employee leaves the company...

For EMI options, if your employee is leaving (or if a director is resigning their post) this is a disqualifying event for the purposes of EMI.

As per EMI legislation, they have 90 days to exercise their options before they will lose all their EMI benefits. The reason for this is that EMI exists to help startups hire and retain talent and so if an employee (or director) is leaving the company it’s no longer serving that purpose.

Within our EMI scheme you had the opportunity to choose how soon the options lapse after the employee leaves. Note that this is different from the HMRC expiry above. If your lapsing period is longer than the 90 day EMI period, this means that the EMI benefits disappear, but the employee may still exercise their now Unapproved options up until they lapse.

Furthermore, the Board retains the discretion to allow exercise where it would otherwise not be permitted. So if you want to allow exercise of lapsed options please contact us for more information.

Step 1: Marking them as a leaver on platform

So now that your employee is no longer at the company, you need to mark them as a leaver on the platform.

You can do this by heading to the Option Holders view in Share Options and clicking on their grant:

This brings out a bar from the right, on which you you will click ‘Stop vesting’:

You should mark them as a Good leaver if they are any type of leaver except a Bad leaver and add the date they left the company as the ‘Stop vesting date’. This freezes their vesting to the date they left the company, and they will only be able to exercise the options which vested up to this date.

If you can’t mark them as a leaver and their option grant also appeared under Actions required, it is because you didn’t close their grant:

If the Option Agreement (and Joint Election if it’s EMI) are signed, you can go ahead and click ‘Get option certificate’ at the bottom of their grant to close it off and you will now be able to do the vesting.

Step 2: Exercise

When your employee leaves the company, they can exercise their options, so long as they haven’t yet lapsed, and it is permitted by the exercise rules of the scheme. If your employee wishes to exercise here’s our step-by-step guide to exercising options for your reference.

Lapsed grants will appear on the platform at the bottom of the 'Option holders' workflow.

Step 3: Updating HMRC of exercised or lapsed options (EMI only)

Now that the EMI options have been converted to EMI options, you need to let HMRC know. Fortunately, you don’t need to let HMRC know each and every time, you just need to let them know by the 6th July in the Annual Return.

You’ll get an email nearer the time to do the Annual Return and here’s our step-by-step guide if you’re curious.

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