EMI Option Scheme Valuation

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  • #2983
    Jonathan Lea
    Keymaster

    For an early stage startup, irrespective of what money has been raised, for the purposes of the EMI option scheme its usually possible to agree a nominal valuation with HMRC (for the date the options are granted).

    A startup got in touch to say that they had produced their own EMI option scheme documentation and had mistakenly agreed the valuation with HMRC as the valuation of the company achieved pursuant to a recent investment round.

    They wanted to know if its possible to change this and reverse the higher valuation already agreed with HMRC…

    #2984
    Jonathan Lea
    Keymaster

    Our answer was yes, its possible to change the valuation in such a scenario. To do this we would submit a fresh valuation for HMRC to agree (together with an explanatory covering letter) and the company would then lapse the original options and issue new ones with the exercise price set at the lower amount, being the nominal value of the shares subject to the option at the date of grant.

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