Employee Share Schemes for Startups

Employee Share schemes (EMI Schemes) can be equally, if not more, beneficial to startups with few employees than to large companies with many employees.

There are a number of other benefits to setting up a company share scheme, but as a founder of a startup, growth will most likely be your key motivator.

We discuss how setting up a share scheme early on can drive the growth of a business.

What is a share scheme?

A share scheme is a way of founders sharing equity with employees. Equity in a company means ownership – anyone who holds shares in a company owns part of the company (and therefore its assets).

There are many different forms of share scheme, but they all work in one of two ways:

Equity now – employees are given actual shares in the company now

Equity later – employees are granted an option which gives them a right to purchase shares in the company at a certain point in the future (at an agreed price)







Why should startups offer equity?

Share schemes can be equally, if not more, beneficial to startups with few employees than to large companies with many employees. Setting up a share scheme early on can assist with:

Contact us

Request a call or a meeting in person with one of our Share Scheme solicitors...

    The reCAPTCHA verification period has expired. Please reload the page.

    Employee share schemes FAQs

    Which share scheme is best for a startup?

    There is a typical “lawyer’s answer” to this question, which is – it depends! The scheme that is best suited to a company depends on the founders’ motivations, which could range from tax effectiveness, affordability or security for their own interests. Some of the HMRC approved schemes also have limitations, such as certain trades not being eligible and limitations on the number of employees the company can have.

    We would recommend that you seek professional advice to explore the various schemes and work out which is best for your business.


    Who should benefit from a share scheme?

    A common misconception with share schemes is that they have to be offered to all employees. However, the majority of share schemes do not need to be for the whole company – instead they are very flexible and allow founders to pick and choose the employees they want to reward and / or retain, which means you can have a scheme for all employees or you could set up to apply to just the senior management team.

    How much equity should a startup set aside?

    This is a decision for the founders of the business to make and will depend on how much equity they want to retain for the future. Founders will also need to consider the requirements of any current or potential external investors such as VCs. Typically, we see smaller businesses set an option pool of between 10-20%.

    How to set up an EMI scheme

    If you are a founder of a startup or an early-stage business and are thinking about sharing equity with your team, we can help you explore the different options available and implement your chosen scheme. If you would to discuss further, please contact Yavan Brar and Emma Roper in our Corporate team.

    Structuring Employee Share Schemes to drive your business’ goals

    The key to the success of many businesses is ensuring that they can get the best out of their people.

    Employee Share Schemes Team

    • All departments
    • Agricultural Law
    • Brexit
    • Careers
    • Co Co - Employee Share Schemes
    • Co Co - Recovery & Insolvency
    • Co Co - Restructuring
    • Co Co Corporate Governance
    • Co Co Corporate lending
    • Co Co Financial Services
    • Co Co Franchising
    • Co Co GDPR
    • Co Co in-house legal support
    • Co Co International Contracts
    • Co Co M&A's
    • Co Co MBOs & MBIs
    • Co Co Partnership and LLPs
    • Co Co Regulatory, Compliance & Competition
    • Co Co Shareholders Agreements
    • Co Co Terms and Conditions
    • Co Co- Intellectual Property
    • CoCo - Banking and Finance
    • CoCo - New Businsess
    • CoCo Competition Law
    • CoCo Consumer Law
    • CoCo Data Protection - Marketing
    • CoCo Data, IT & Technology
    • Commercial Law
    • Commercial Property
    • Construction
    • Corporate & Commercial
    • Corporate Law
    • Debt Recovery
    • Dispute Resolution
    • Disputes - Business
    • Disputes - Declarations of trust
    • Disputes - Probate and inheritance
    • Disputes - Professional negligence
    • Disputes - Restrictive Covenants
    • Disputes - Shareholders & Partnership
    • Disputes - Tenants in Residential Property
    • Disputes - Wills, trusts & probate disputes
    • Disputes and Small Claims
    • Disputes Construction
    • Disputes with Co-owners
    • Divorce
    • Employee - Termination
    • Employer - Termination
    • Employment
    • Employment - Business protection
    • Employment - Collective consultations
    • Employment - Contracts, services, consultancy
    • Employment - Employee benefits
    • Employment - Employee Procedures
    • Employment - Equality, discrimination and harassment
    • Employment - Family Friendly Rights
    • Employment - GDPR and Data Protection
    • Employment - Post employment obligations
    • Employment - Redundancy & Reorganisation
    • Employment - Settlement Agreements
    • Employment - Tribunal Claims
    • Employment - TUPE
    • Employment - Wages, holiday and sick pay
    • Employment - Workers rights
    • Employment Tribunal claims
    • Estate Administration
    • Expat Legal Services
    • Family Law
    • Financial Services
    • GDPR
    • Help to Buy
    • Immigration law
    • International Legal Services
    • Key Property Contacts
    • Land and Property Disputes
    • Land, development and construction
    • Lasting Powers of Attorney
    • Leasehold
    • Licensing Law
    • Money, Tax and Inheritance
    • New Build Conveyancing
    • Private Wealth and Inheritance
    • Professional Negligence
    • Property Finance
    • Property Law
    • Residential Property
    • Residential Property - Completions
    • Residential Property - Shared Ownership
    • Trainee Solicitor
    • Wills, Trusts & Probate

    Latest Insights

    Herrington Carmichael has been advising families and businesses for over 175 years. We provide an increasingly specialist legal practice – we offer a wide range of services, beyond that of a traditional private client firm to meet the demands of our UK and international clients.

    Award winning legal advice

    Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2023’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.

    +44 (0)1276 686 222

    Email: info@herrington-carmichael.com

    Brennan House, Farnborough Aerospace Centre Business Park, Farnborough, GU14 6XR

    Reading (Appointment only)
    The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA

    Ascot (Appointment only)
    102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY

    London (Appointment only)
    60 St Martins Lane, Covent Garden, London WC2N 4JS

    Privacy Policy   |   Legal Notices, T&Cs, Complaints Resolution   |   Cookies  |   Client Feedback   |  Diversity Data



    Our Services

    Corporate Lawyers
    Commercial Lawyers
    Commercial Property Lawyers
    Conveyancing Solicitors
    Dispute Resolution Lawyers
    Divorce & Family Lawyers
    Employment Lawyers
    Immigration Law Services
    Private Wealth & Inheritance Lawyers
    Startups & New Business Lawyers

    Pay Online >

    Please be aware that we have no plans to change our bank details. If you receive any indication that any of our bank details have changed please contact us before sending us any funds. We take no responsibility for monies you transfer into the wrong bank account.

    © 2023 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.

    Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.