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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Enterprise Management Incentives (EMI): Company reorganisations: Meaning of company reorganisation

If a company whose shares are the subject of qualifying options is taken over or merges, it loses its independence. This is a disqualifying event unless the company taking over or merging with the EMI company, the acquiring company, grants a replacement option in exchange for the qualifying option within six months.

This can occur when the acquiring company:

  • obtains control of the EMI company by making a general offer to acquire the whole of the issued share capital of the company or to acquire all the shares which are of the same class as the option shares,
  • obtains control of the EMI company or as a result of a compromise or arrangement sanctioned by the court under section 899 of the Companies Act 2006,
  • becomes bound or entitled to acquire the shares of dissenting shareholders under sections 979 to 982 of the Companies Act 2006, or
  • obtains all the shares of the EMI company as a result of the interposition of a new holding company and a qualifying exchange of shares, (Paragraph 39).