This change has already been announced in the March 2010 Budget. Under the current rules in the EMI legislation, in order for a company to be able to grant EMI options to employees, it (or, if it is the parent company of a holding group, at least one subsidiary), must carry on a qualifying trade ‘wholly or mainly’ in the UK. In order to ensure that the EMI rules comply with EU State Aid guidelines, this rule will be amended with effect from the date the 2010 Finance Bill receives Royal Assent (probably late Summer/Autumn 2010) so that a company wishing to grant EMI options to employees need only have a permanent establishment in the UK.

Our view
This amendment to the EMI legislation is good news for offshore enterprises operating in the UK where the costs and commerciality of establishing an operating subsidiary in the UK often outweigh the advantages of being able to grant EMI options to UK employees.

For more information on these issues please contact

Victoria Goode or Sara Cohen

or your usual Lewis Silkin contact