Knowledge Base: Share Options Guide

This article includes:

• Setting Up an Options Scheme
  • Step 1: Defining the Options Scheme
  • Step 2: Approving the Options Scheme
• Types of Options Schemes
  • EMI (Enterprise Management Incentives) Options
  • Unapproved Options
• Setting Up a New EMI Valuation
• Granting Options
• Managing Options

Setting Up an Options Scheme

Step 1: Defining the Options Scheme

Total Share Pool Size

• The platform will default to a circa 10% (fully-diluted) share option pool, but you can customise this amount to suit your needs.

Convert to Share Type

• The options must be convertible into ordinary shares.
• If you have added alternative share classes (e.g., A Ordinary, B Ordinary), they will appear in the drop down.

Articles of Association

• Upload your company’s Articles of Association.
• This ensures that all parties signing the documents will be reminded of the rights and privileges granted when the options convert to shares.

Finish Defining the Scheme

• The platform will provide a warning that the documents are being generated.
• Wait a few minutes and refresh the page.
• All necessary documents will now be generated.

Step 2: Approving the Options Scheme

Documents for Approval

Always Require Signature:

• Board Minutes
• Shareholder Resolution
• Scheme Rules

Do Not Require Signature:

• Scheme FAQs

May Require Signature (only if investor consents were selected during funding round):

• Consent Letters

Signing the Documents

• On the platform’s left-hand menu, select "Sign My Documents."
• Choose the documents to sign and authenticate using your account password.

Types of Options Schemes

1. EMI (Enterprise Management Incentives) Options

• Tax-Advantaged: EMI options allow employees to benefit from share ownership without the risk of loss if share value decreases.
• HMRC Approval: An HMRC-approved valuation is always recommended, with all relevant share options being granted within 90 days the valuation being confirmed by HMRC.

2. Unapproved Options

• Flexible Options: These allow employees and other stakeholders to buy shares at a predetermined price in the future.
• No HMRC Valuation: These options can be granted immediately, without the need for HMRC approval.

Setting Up a New EMI Valuation

1. Download Spreadsheet Template

Download the valuation template from the platform.

2. Input Values

Fill in the template, which will calculate your company’s valuation.

3. Upload Completed Spreadsheet

Upload the filled-out spreadsheet back to the platform.

4. Fill in Market Values

Enter the Actual Market Value and Initial Unrestricted Market Value based on the spreadsheet’s calculation.

5. Select Valuation Date

Specify the requested start date for the valuation to HMRC.

6. Fill in Share Details

Include the number of shares, price per share, etc.

7. Fill in Other Details

Provide your HMRC Company Reference and any other relevant details for the valuation.

8. Save the Valuation

The information is saved to generate the VAL231 form for HMRC submission.

Important Notes:

• You can make changes while the status is "Defining."
• Ensure you download and sign the VAL231 form, valuation calculation spreadsheet, and report covering letter before sending to HMRC.

After Submission:

• Confirm on the platform that the valuation has been sent. The status will change to "Approval Pending."
• Once HMRC approves, mark the status as approved on the platform.
• If not approved, you can start a new valuation process anytime.

Granting Options

1. Enter Grant Holder Details

• First Name
• Last Name
• Email Address
• National Insurance Number (necessary for the company's reporting responsibility)

2. Define the Grant

• Number of Shares
• Price Per Share
• Vesting Terms

3. Vesting Options:

• On a Specific Day: Set a date when the shares will vest.
• Regular Vesting: Set monthly, quarterly, or annual vesting periods.
• On an Anniversary: Shares vest on a specified anniversary.
• On a Specific Condition: Vesting is contingent on a milestone, such as reaching a company target.
• On Exit Only: Shares vest upon an exit event (e.g., company sale or IPO).

4. Create the Share Option Grant

• Once defined, the grant will have a status of "Ready to Invite."
• You can make changes at this stage.

5. Invite to the Platform

• Invite the recipient to the platform.
• Once both parties have signed the documents, the grant status will change to "Granted."

Managing Options

Once the options are granted, you can track their status and manage them on the platform.

• Exercise: Allows the holder to exercise their right and receive the shares without purchasing them at the grant price.
• Vest Some: Vest shares outside the predefined vesting schedule. (i.e. on a discretionary basis).
• Lapse: The option expires, and the shares are no longer available to the holder.

You can also download a csv report.