Pre-IPO Equity Structuring for Senior Hires

The equity structuring decisions made in the eighteen to thirty-six months before an IPO are among the most commercially consequential governance choices a private company makes. The management equity pool — who holds it, in what form, on what terms — determines how the senior leadership team is incentivised through the final growth phase before listing, how the team is retained through the IPO process and the post-IPO lock-up period, and how the team’s interests line up with those of the new public market shareholders once the company is listed.

This guide explains the pre-IPO equity picture for senior hires in the UK: the move from EMI options to other share schemes as the company grows beyond EMI qualification thresholds, the mechanics of growth shares and unapproved options as intermediate vehicles, the design of the LTIP that will govern post-IPO senior remuneration, and the specific equity considerations for senior hires made in the pre-IPO phase. It has been updated for the EMI changes that took effect on 6 April 2026 and for the share scheme and capital gains measures announced at the Autumn Budget on 28 October 2026, some of which are not yet law.

The pre-IPO period creates a specific tension in equity structuring for new senior hires. The business needs to offer compelling equity participation to attract the listed-company-grade talent it needs for the IPO — typically a listed-company-capable CFO, a Company Secretary, a Head of Investor Relations and a strengthened board — but the equity structure must also be capable of transitioning to a listed company LTIP framework that will satisfy institutional investors and proxy advisers after admission. Getting this balance right requires advance planning rather than improvisation once the banks are appointed. For the wider hiring context, our guide to hiring for IPO and public markets sets out the roles that an IPO timetable usually triggers and the order in which to fill them.

EMI Options: The Foundation of Pre-IPO Equity

Enterprise Management Incentive (EMI) options are the primary equity vehicle for senior hires at qualifying UK growth companies. EMI provides highly favourable tax treatment: there is no income tax or National Insurance charge at grant; there is no income tax or NIC at exercise provided the options were granted at no less than market value; and any gain on disposal of the shares acquired on exercise is subject to capital gains tax rather than income tax. Business Asset Disposal Relief (BADR) can apply to gains on EMI shares where the option was granted at least two years before disposal, and EMI shareholders do not need to meet the usual 5% shareholding test to qualify. BADR now taxes qualifying gains at 18% for disposals on or after 6 April 2026, up from 14% in the 2025/26 tax year and 10% before that, within a lifetime limit of £1 million per individual.

EMI qualification was widened significantly from 6 April 2026. The HMRC guidance on Enterprise Management Incentives now confirms that a company can grant EMI options if it has gross assets of £120 million or less (previously £30 million) and fewer than 500 full-time equivalent employees (previously 250). The company-wide limit on the value of unexercised EMI options has risen to £6 million (previously £3 million), and the maximum life of an EMI option has been extended from 10 to 15 years. The individual limit remains £250,000 of options, measured at grant value, in any three-year period. The other core conditions are unchanged: the company must be independent (not under the control of another company), must carry on a qualifying trade, and the employee must work at least 25 hours a week or, if less, 75% of their working time for the company.

The practical effect is that many more businesses now reach the pre-IPO phase still inside EMI. Under the old £30 million and 250-employee limits, scale-ups commonly fell out of EMI around Series B or C; under the new limits, a business can grow considerably further before it loses access. That changes pre-IPO planning. The question is no longer only “what replaces EMI?” but “how much EMI capacity is left, how long will we stay qualifying, and which hires should receive EMI before we cross a threshold?” The timing of a likely loss of qualifying status relative to the planned IPO timeline remains an important variable.

EMI options should be granted at market value to preserve the favourable tax treatment. Most companies agree the value of the shares with HMRC’s Shares and Assets Valuation team before grant, which gives certainty over the figure. The UK has no equivalent of the formal US 409A valuation process; what HMRC requires is a supportable market value, and the agreed value is typically valid for 120 days. The exercise price set at grant becomes the employee’s base cost for capital gains tax on eventual disposal, so a grant made at a lower, properly supported valuation preserves more of the eventual gain within the CGT regime.

Recent Changes to EMI, CSOP and BADR

Two sets of changes now affect pre-IPO equity planning. The first, already in force, is the EMI expansion from 6 April 2026 described above. The second is the package of measures announced at the Autumn Budget on 28 October 2026. These are announcements, not yet legislation: they are expected to be enacted through the forthcoming Finance Bill, and details may change before they take effect. Offer letters and plan rules drafted now should be written with that uncertainty in mind.

• CSOP becomes “EMI2”. The Company Share Option Plan is being rebranded as EMI2. From 6 April 2027 the individual limit is due to double from £60,000 to £120,000, the maximum exercise period is due to extend from 10 to 15 years, and EMI2 options will no longer count towards the £250,000 EMI individual limit — so a single executive could in principle hold £250,000 of EMI and £120,000 of EMI2 options. Options must still be granted at market value and generally held for three years before exercise to obtain the tax advantages. The underlying legislation keeps the CSOP name.
• Longer exercise window after an EMI disqualifying event. The current 90-day window to exercise and keep EMI tax treatment after a disqualifying event is due to be extended from April 2027. Government documents published on Budget day gave differing periods, so the final length should be confirmed once the Finance Bill is published.
• EMI grant notifications. The separate HMRC notification for each EMI grant is due to be removed for grants made on or after 6 April 2027, with grants reported instead in the annual return. Until then, the existing notification deadline still applies, and a missed notification can cost the options their EMI status.
• BADR lifetime limit halved. The government has published a policy paper on reducing the BADR lifetime limit from £1 million to £500,000 for qualifying disposals on or after 6 April 2027. The 18% rate is unchanged.

For senior hires joining a business that expects to list in 2027 or 2028, the BADR change matters. An executive who was counting on £1 million of relief at 18% now faces relief on only half that for disposals after 5 April 2027, with the balance taxed at the main higher CGT rate. That feeds directly into how candidates value an equity offer, and into whether any disposals, such as a partial secondary sale in a pre-IPO round, should be timed before the change. Our guide to BADR and Section 431 for senior executives covers the relief in more detail; individual executives should take personal tax advice on their own position.

Growth Shares: An Alternative to Options

Growth shares — a class of shares that participate in the company’s growth above a defined hurdle value — are an alternative to options that can provide similar economic outcomes with different tax and structural characteristics. The holder of growth shares receives shares immediately rather than a right to acquire them in future, which starts the clock on the capital gains holding period from day one and gives a different relationship with the company’s governance. Growth shares are particularly useful where the company wants management to be actual shareholders from the outset, with whatever voting, information and dividend rights the class carries, rather than option holders who are economically but not legally shareholders.

Growth shares are structured with a hurdle, usually set at or above the current equity value of the company at issue, and participate only in value created above that hurdle. As an illustration, if the company is valued at £50 million when the shares are issued, the growth shares participate only in value above £50 million, leaving the existing ordinary shareholders’ interests in the current value intact. The hurdle is the economic equivalent of the option exercise price: both require value to be created above a defined starting point before the holder benefits.

The tax treatment of growth shares depends on whether they are acquired at market value, in which case the eventual gain is a capital gain, or at below market value, in which case the shortfall is employment income subject to income tax and, where the shares are readily convertible assets, NIC. Because growth shares are usually subject to leaver provisions and other restrictions, they are “restricted securities” for tax purposes, and the employee and company will normally sign a joint election under section 431 of the Income Tax (Earnings and Pensions) Act 2003. HMRC’s manual on elections to exclude outstanding restrictions confirms the election must be made no more than 14 days after the acquisition. The election means the shares are taxed on their unrestricted market value at acquisition, so that later growth falls within capital gains tax rather than being partly taxed as income when restrictions lift. A valuation of the growth share class, ideally agreed or at least well documented before issue, is a critical part of the process. Missing the 14-day window is one of the most common — and least fixable — errors uncovered in IPO due diligence.

Growth shares remain relevant even after the EMI expansion. They suit executives who will not meet the EMI working-time test, companies that have already used their EMI capacity on the existing team, and businesses that expect to lose independence or exceed the EMI limits before the senior hire’s options would vest. Some practitioners expect EMI2 to make growth shares less attractive for mid-sized grants once the £120,000 limit is in force, but for larger senior awards growth shares will continue to sit alongside approved options.

Unapproved Options: When EMI Is Not Available

Where a company has exceeded the EMI qualification thresholds — through employee numbers, gross assets or loss of independence — or where an executive’s grant exceeds the £250,000 individual limit, unapproved options are the standard alternative. Unapproved options do not benefit from the EMI tax treatment. The gain on exercise, being the difference between the market value at exercise and the exercise price, is taxed as employment income at the executive’s marginal rate (up to 45%, or higher in Scotland). Where the shares are readily convertible assets — which they will be once the company is listed — the gain is collected through PAYE and also attracts employee NIC (2% above the upper earnings limit) and employer NIC, currently 15%. This materially reduces the after-tax value of unapproved options compared with EMI options of equivalent face value, and the employer NIC cost needs to be modelled by the company as well.

The Company Share Option Plan — now being rebranded as EMI2 — is the tax-advantaged option scheme for companies outside EMI. Since April 2023 the individual limit has been £60,000 of options at grant value, due to rise to £120,000 from 6 April 2027. CSOP options exercised after three years (or earlier in certain good leaver and takeover situations) are free of income tax, with the gain taxed to CGT on disposal. For senior executives with grants well above the limit, CSOP covers only a portion of the total award and is supplemented by unapproved options for the balance; the approved portion benefits from the tax treatment while the unapproved portion does not. A blended award of this kind is common for pre-IPO CFOs and COOs and should be explained clearly in the offer, because candidates often assume the whole grant is tax-advantaged.

The Pre-IPO to Post-IPO Transition: Building the LTIP Foundation

The most important planning question for pre-IPO equity structuring is how the pre-IPO equity pool connects to the post-IPO LTIP framework that the listed company will need. The answer determines whether the management team arrives at the IPO with an equity structure that transitions smoothly into the listed company remuneration framework, or with one that creates anomalies — unvested options with unusual exercise prices, growth shares with complex capital structure implications, or participations that are difficult to describe in the prospectus — requiring expensive restructuring at the worst possible time.

Good practice involves designing the management equity pool with the post-IPO LTIP in mind from two to three years before the planned listing. The key decisions include: the vesting schedule for pre-IPO grants (ideally aligned with the lock-up period, so that vesting and the end of the lock-up broadly coincide); the performance conditions for the final pre-IPO tranche (which should use metrics that will make sense to public market investors); and the treatment of unvested pre-IPO grants on IPO (conversion into listed shares, rollover into the new LTIP, or full or partial vesting on admission).

EMI planning sits at the centre of this. A flotation is not, in itself, an EMI disqualifying event: existing EMI options can continue after admission and retain their tax treatment, provided no disqualifying event occurs. The key disqualifying event to watch is a loss of independence — the company coming under the control of another company — along with changes to the option terms that increase their value, and the employee ceasing to be eligible. Exceeding the gross asset or employee limits after grant does not disqualify existing options, but the company cannot make new EMI grants unless it still meets every qualifying condition on the grant date. Many companies will be over at least one limit by the time they list, so the last EMI grants to senior hires typically need to be made before the IPO, often well before. Options should also be checked for exercise conditions that are triggered by the listing itself, so that executives are not forced to exercise at a point that suits neither them nor the lock-up.

Post-IPO LTIP Design for Former Pre-IPO Senior Hires

The LTIP that the listed company establishes at or shortly after IPO will govern the ongoing equity incentivisation of the senior leadership team. For executives who joined in the pre-IPO phase and hold unvested pre-IPO equity, the LTIP design needs to address the transition: are unvested pre-IPO grants rolled into the LTIP, or do they continue as separate arrangements alongside it? Each approach has different disclosure implications in the directors’ remuneration report and different consequences for how institutional investors assess the package. Our guide to LTIP structures at UK listed firms covers performance share plans, restricted stock and hybrid models in more depth.

Institutional investors assess the total management equity pool at IPO — including both pre-IPO unvested grants and the new LTIP — and form a view on whether the management team’s total incentive exposure is proportionate. An IPO that arrives with a very large pre-IPO pool, perhaps established when the company was much smaller, plus a full LTIP grant, may be seen as excessive accumulation relative to the returns shareholders are being asked to underwrite. The Investment Association’s Principles of Remuneration for 2026 are the reference point most UK institutional investors use. They emphasise a clear link between pay and performance, company-specific rationale rather than generic benchmarking, caution about hybrid schemes that trade performance alignment for certainty, and a firm line against retrospective changes to in-flight awards. The incoming Remuneration Committee Chair should engage with major prospective investors and proxy advisers on the post-IPO policy before listing, not after.

The UK Corporate Governance Code also shapes post-IPO LTIP design for companies in the main market commercial companies category. It expects share awards to be subject to a total vesting and holding period of at least five years, malus and clawback provisions that the company can actually operate, and post-employment shareholding requirements. Pre-IPO grants do not have to meet these expectations, but the post-IPO LTIP will, and new senior hires should understand at offer stage that their listed-company awards will look different from the pre-IPO equity that attracted them.

Equity Offers for Pre-IPO Senior Hires: Practical Construction

When constructing an equity offer for a senior hire in the pre-IPO phase, the key elements to address are: the instrument (EMI if the company and the individual qualify; EMI2/CSOP, unapproved options or growth shares if not, or a combination); the size of the grant as a percentage of the fully diluted share capital; the exercise price or hurdle; the vesting schedule; any performance conditions; the treatment on IPO (conversion mechanics and lock-up obligations); and the exit provisions (drag and tag rights, leaver terms and what happens to the award on an alternative exit such as a trade sale before IPO).

Grant sizes vary widely by role, stage and sector, and there is no reliable single benchmark. What matters for the candidate is context. Presenting the grant in both percentage and value terms — for example, “0.4% of the fully diluted share capital, worth £320,000 at the most recent £80 million post-money valuation” — lets a candidate assess the offer properly and compare it with alternatives. Because later-stage cap tables have been diluted through several rounds and valuations are higher, percentage grants tend to fall as the IPO approaches even when the value on offer rises. Our executive offer construction guide covers how equity sits alongside salary, bonus and buy-out of forfeited awards in the overall package.

Senior hires from listed companies often need a buy-out of unvested awards they forfeit by moving. In a pre-IPO business those buy-outs are usually delivered in equity rather than cash, which makes the instrument choice and the tax treatment even more important. A candidate forfeiting listed shares with a known value is being asked to accept unlisted equity whose value depends on an IPO that has not happened yet, and the offer has to recognise that difference in risk.

The Option Pool Refresh at Pre-IPO Stage

A common pre-IPO challenge is that the option pool established at the company’s early funding rounds has been substantially used by grants to the existing team, leaving too little to make attractive grants to the new senior hires that the IPO process requires. Refreshing the pool — making additional shares available for grants to new and existing employees — requires board approval and, at VC-backed businesses, investor consent under the shareholders’ agreement and articles.

A pool refresh is dilutive to all existing shareholders, including the management team. Managing that dilution means modelling the effect at both the current valuation and the expected IPO valuation. Ten per cent of additional dilution feels very different at a £50 million valuation than at a £500 million one, even though the percentage is the same. The timing of the refresh, the valuation at which grants are then made and the pool’s interaction with the new £6 million EMI company limit all need to be considered together. Pools that were sized around the old £3 million EMI cap may now have room for more EMI grants than the company has planned for.

Lock-Up Provisions and Post-IPO Equity Management

IPO lock-up provisions — restrictions on the sale of shares by directors, senior managers and major shareholders for a defined period after admission — apply to pre-IPO equity holders as well as to founders and institutional investors. Management lock-ups are negotiated with the underwriting banks and are commonly twelve months or longer, often with provision for the banks to consent to earlier sales in specific circumstances. Lock-up provisions should be anticipated in the management equity documentation before IPO, not left to be agreed when the underwriting negotiation begins.

Senior executives who have a significant part of their personal wealth concentrated in the company’s shares at IPO face specific wealth management questions: diversification after the lock-up, the tax planning for EMI or growth share disposals (now including the reduced BADR lifetime limit), and the interaction between share sales and the closed periods and dealing rules that apply to persons discharging managerial responsibilities under the UK Market Abuse Regulation. Personal financial and tax advice should be taken well before the IPO rather than once the lock-up is ending. Many IPO advisers include personal planning support for the senior management team as part of their preparation work.

How Exec Capital Approaches Pre-IPO Senior Appointments

Exec Capital runs senior executive searches for businesses preparing for IPO across the roles that the IPO process most commonly requires: a listed-company-capable CFO, a Head of Investor Relations, a Company Secretary, and in some cases new commercial or operational leadership that the final growth phase demands. Our approach includes specific attention to the equity context — making sure that both the package and the candidate’s equity expectations fit the company’s pre-IPO equity architecture and its post-IPO governance framework. Board composition is usually the other half of IPO readiness, and our listed company non-executive recruitment service finds the independent NEDs and committee chairs that admission requires. For what typically changes in the leadership team after admission, the companion post-IPO senior hiring guide is directly relevant. Sister firm FD Capital also specialises in CFO placements at pre-IPO and recently listed businesses.

Further Reading and Authoritative Sources

HMRC’s EMI guidance and its Employment Related Securities Manual, both linked above, are the authoritative sources on EMI qualification and restricted securities elections. The FCA’s Policy Statement PS24/6 sets out the UK Listing Rules that came into force on 29 July 2024, replacing the premium and standard segments with a single category for equity shares in commercial companies (ESCC). The Investment Association’s Principles of Remuneration set the institutional investor expectations for post-IPO pay. On the Exec Capital site, our guide to equity and incentives for senior hires covers the wider range of instruments used in private and PE-backed businesses, and the guide to senior hiring at US VC-backed UK firms deals with the different equity conventions that apply when the investor base is American.

The UK Listing Regime and Remuneration Governance After Admission

Pre-IPO equity planning needs a clear view of which market the company is heading for, because the governance and remuneration expectations differ. Under the UK Listing Rules introduced in July 2024, a main market company in the ESCC category is expected to report against the UK Corporate Governance Code on a comply-or-explain basis, put a remuneration policy to a binding shareholder vote under the Companies Act, and obtain shareholder approval for certain employee share schemes and long-term incentive arrangements. An AIM company is not subject to the UK Listing Rules; it must adopt a recognised governance code (most commonly the QCA Corporate Governance Code) and its remuneration framework is shaped more by investor expectations than by formal rules, though many AIM investors apply similar principles.

Whichever market is chosen, the newly listed company needs a functioning Remuneration Committee chaired by an independent non-executive director, ideally one who has run listed-company remuneration policy consultations before. That appointment is often made twelve months or more ahead of admission so that the Chair can shape the post-IPO policy and own the investor engagement. Our guide to board construction at UK listed companies explains how the committee structure, independence tests and skills mix fit together, and the Remuneration Committee Chair recruitment page covers how we approach that search.

The 2024 Code also brought in a requirement, applying from financial years beginning on or after 1 January 2026, for companies to describe their malus and clawback provisions and how they have been used. Post-IPO LTIP rules, and any pre-IPO awards that roll into them, should therefore contain provisions the company can actually enforce, with clear triggers and a defined period of operation.

Waterfall Analysis and Exit Modelling for Pre-IPO Senior Hires

When constructing an equity offer for a pre-IPO senior hire, a clear waterfall analysis — showing how exit proceeds would be distributed between the various equity holders at different exit valuations — is one of the most effective tools for making the offer credible and transparent. It shows at what exit valuation the executive’s equity begins to have real value (above the hurdle or exercise price), what it is worth at the current valuation, and what it would be worth at two, three and five times that valuation. It makes the offer concrete rather than aspirational and lets the candidate compare it properly with other opportunities.

Building the waterfall requires the current cap table, the current valuation, and the terms of every equity instrument — options, preference shares, convertible loan notes, warrants and any anti-dilution provisions — that affects how proceeds are shared. The CFO and legal counsel should prepare or review the analysis, and it should be checked before it goes to candidates. A waterfall that understates the dilution from preference shares or misstates the effective exercise price of outstanding options creates a credibility problem if the candidate’s own advisers rerun the numbers and find discrepancies.

The most common modelling mistake is presenting the analysis without the preference share overhang. Many VC-backed businesses have preference shares that return invested capital, and sometimes a preferred return, before ordinary holders receive anything. Those terms materially change the breakeven valuation for option and ordinary shareholders. As an illustration, an executive holding options with a £50 million exercise threshold in a company with £40 million of liquidation preference ahead of the ordinary shares may need an exit well above £50 million before the options are worth anything on a trade sale. On an IPO, preference shares usually convert to ordinary shares, which changes the picture again — so the waterfall should show both routes. Leaving this out creates expectations that damage trust when the reality becomes clear.

The waterfall should also be shown on an after-tax basis for the main instruments on offer. With BADR at 18% and its lifetime limit due to fall to £500,000 from April 2027, the after-tax gap between an EMI award, an EMI2/CSOP award and an unapproved option of the same face value can be significant, and senior candidates and their advisers will compare offers on that basis.

Managing the Option Pool for Multiple Pre-IPO Senior Hires

Pre-IPO businesses often need to make several senior hires at once or in quick succession — building out the complete leadership team required for the listed company — which creates a pool management challenge. Each hire needs a meaningful grant; together the grants reduce the remaining pool; and the cumulative dilution affects the value of every award. Balancing these demands requires modelling in advance rather than deciding hire by hire.

Good practice involves mapping all planned senior hires and their expected equity requirements before beginning any of the individual searches; modelling the cumulative dilution of all planned grants; obtaining board and investor approval for the full hire plan before committing to any individual grant; and setting a consistent grant policy — a standard award range for each level — so that equity terms are not negotiated ad hoc with each candidate. Under the new EMI limits, the plan should also allocate the available EMI capacity deliberately: which hires receive EMI, which receive EMI2/CSOP or growth shares, and what happens to EMI eligibility if the company is likely to cross the 500-employee or £120 million gross asset threshold before the later hires join.

The grant policy should be benchmarked against comparable businesses at a similar stage, using data from the company’s investors, its remuneration advisers and published equity platforms. A policy clearly derived from market data is more credible to new hires, easier to defend to existing employees who compare their grants with later joiners, and more likely to be approved by investors than one built case by case.

EMI Options for Non-UK Employees

EMI options can only be granted to employees who meet the working time requirement — at least 25 hours a week or, if less, 75% of their working time for the company or group. This affects executives who split their time between a UK company and a non-UK parent or affiliate, and executives who work part-time. Senior people who join a UK pre-IPO business on a part-time or fractional basis, which is increasingly common in the run-up to an IPO, may not meet the requirement and cannot then receive EMI options whatever the company’s own status. Fractional and interim executives engaged through their own service company are not employees at all, so any equity for them has to be structured differently, usually as unapproved options or a cash-settled arrangement agreed carefully with advisers.

For executives based outside the UK and employed by a non-UK group company, EMI is generally not available. They can receive unapproved options over shares in the UK company, but without UK tax advantages, and the tax treatment will depend on the rules in their country of residence, which vary considerably. International pre-IPO businesses should take specialist advice on the structures available to non-UK employees early, rather than discovering the limitations when a particular grant is planned. If the IPO is to be in the US rather than London, the plan design will also need to work under US securities and tax rules, which usually means a sub-plan for UK employees.

IPO Readiness Assessment for the Equity Structure

In the twelve to eighteen months before an IPO, the company’s lawyers and banks will assess the management equity structure as part of the IPO readiness and due diligence process. They will examine: cap table clarity (is the fully diluted share capital clearly documented and consistent across the register and option schedules?); documentation completeness (are all EMI and other option grants supported by valuations, signed agreements, correct vesting schedules and timely HMRC notifications?); preference share conversion mechanics (how do preference shares convert on IPO and what is the economic impact on management equity?); and disclosure (what equity information must go in the prospectus, and is it available and accurate?).

Managing this requires close collaboration between the CFO, the Company Secretary, legal counsel and the bank’s equity capital markets team. Issues found — EMI grants without supportable valuations, late or missing notifications, option agreements with inconsistent terms, missing section 431 elections, or preference share terms that create unusual IPO economics — can usually be resolved, but they take time that is not available if they surface in the month before the planned listing. The equity readiness review should be commissioned at least twelve months before the target IPO date, and it should now include a check of which existing EMI options can benefit from the 15-year exercise period and whether any plan rules need amending to reflect it.

Exec Capital’s Pre-IPO Practice

Exec Capital’s pre-IPO practice covers the senior hires that growing businesses make in preparation for listing: listed-company-capable CFOs through our CFO recruitment practice, who can manage the investor relations and governance demands of a public company; Company Secretaries with listed company experience; Investor Relations Directors with capital markets backgrounds; and the independent non-executive directors, Chairs and committee chairs that a listed board needs. Our approach includes specific attention to the equity context — making sure candidates understand the pre-IPO equity architecture, that the offer gives genuine retention through the IPO process and the lock-up, and that the terms are consistent with the remuneration governance the company will need once listed. Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate.

Frequently asked questions

Can a company still grant EMI options once it is listed?

Listing does not automatically rule out EMI. A listed company can grant EMI options if it still meets every qualifying condition on the grant date, including independence, gross assets of £120 million or less and fewer than 500 full-time equivalent employees. In practice many companies exceed at least one limit by the time they list, which is why final EMI grants are usually made before admission.

What happens to existing EMI options on an IPO?

A flotation is not in itself a disqualifying event, so existing EMI options can continue with their tax treatment intact after admission. Holders should check the plan rules for any exercise rights triggered by the listing, and watch for later events — such as the company coming under the control of another company — that would be disqualifying.

What is EMI2?

EMI2 is the new name for the Company Share Option Plan, announced at the Autumn Budget 2026. From 6 April 2027 the individual limit is due to rise to £120,000 and the exercise period to 15 years, and EMI2 options will no longer count towards the £250,000 EMI limit. These changes still need to be legislated.

How long is there to make a section 431 election?

Fourteen days from the date the shares are acquired. The election is made jointly by the employee and the employer and is kept on file rather than sent to HMRC. It is particularly important for growth shares and for shares acquired on exercise of unapproved options before an IPO.

Does BADR still apply to EMI shares?

Yes, where the option was granted at least two years before the disposal. The rate is 18% for disposals on or after 6 April 2026, within a £1 million lifetime limit that is due to fall to £500,000 for disposals on or after 6 April 2027.

When should a pre-IPO company appoint its Remuneration Committee Chair?

Ideally twelve months or more before admission. That gives the Chair time to shape the post-IPO remuneration policy, oversee the transition of pre-IPO awards and lead the conversations with prospective institutional investors before the prospectus is finalised.