Getting the best deal for Aeristech’s EMI scheme

28 May 2020 | Client news

Getting the best deal for Aeristech’s EMI scheme

Harper James has helped one of our longest-serving clients to deliver a welcome boost to its workforce. Aeristech contacted our corporate solicitor Abby Watson about setting up an Enterprise Management Incentive (EMI) scheme.

EMI share option schemes are a type of employee share option that offer tax advantages. Specifically targeted at start-ups, EMI schemes enable early-stage companies to attract and retain key staff by rewarding them with an equity stake in the business. 

Although many EMI schemes are flexible about exercise conditions, some companies only allow employees to exercise their option if the company is sold. This means employees with options get a stake in the company but without shareholder rights, allowing them to participate in the sale at no direct cost to the company or its founders.

Important in any EMI scheme is the exercise price, which is the price payable for the option shares on exercise. We would always recommend this price is approved by HMRC before options are granted.

With Aeristech, Abby was able to agree a valuation at a greater discount than previously agreed with HMRC, meaning that 34 of Aeristech’s employees will now benefit from an improved scheme. 

Yesterday Duncan Kerr, the firm’s first VC investor who has since joined as Chief Operating Officer, said: ‘We were very grateful for the support we received from Harper James. Their skill and expertise helped us to deliver a package which rewards our fantastic employees. In this specific case, we allowed exercise immediately on grant, as the strike price is sufficient to bring capital into the business, should any employee choose to exercise early.’

Aeristech, which was formed in 2006, has developed technology which can power the world’s fastest-accelerating and most power-dense permanent magnet variable speed electric motors.

Their work on hydrogen fuel cells has also put Aeristech at the forefront of the drive towards cleaner energy. 

Harper James has worked with Aeristech for several years. The Warwick-based company was one of our first clients. 

Abby Watson said: ‘I have worked with Aeristech on a number of occasions in connection with their EMI scheme. Most recently, I was able to secure an agreed valuation with HMRC at an increased discount due to the detrimental effect that COVID-19 has had on the business. It enabled us to then assist Aeristech in granting EMI options to both new and existing option holders. I was glad to be able to help the client deliver a package they were happy with.’

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