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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Enterprise Management Incentives (EMI): Qualifying companies: Independence requirement

To be a qualifying company for EMI, a company must not be a 51% subsidiary. This means that more than 50% of its ordinary share capital must not be owned by another company or controlled by another company, or by another company and persons connected with it. Arrangements must not exist which could result in the company becoming a 51% subsidiary or otherwise being controlled, (Paragraph 9).

Control in this context means the power of one company to ensure that the affairs of another company whose shares are subject to EMI option are conducted in accordance with that company’s wishes. This may be through share ownership, voting power, or because of any powers conferred by Articles of Association or other document, (Sections 719 ITEPA 2003 and 995 ITA 2007).