What option holders and platform editors need to do when exercising options
For option holders
Log in to your Vestd account and go to your dashboard to view your EMI and/or unapproved options.
You'll see a general overview of your options at the top of the screen, including the number of vested and unvested options. Only vested options can be exercised.
However, depending on the terms of your option agreement, your vested options may not be exercisable yet.
Options are either "Exercisable" or "Exit only." If your vested options aren't showing as exercisable, the exercise condition will be "Exit only" - meaning you'll only be able to exercise when an exit event occurs (e.g. business sale or merger, IPO, company buyback).
Click Agreement summary to view the terms of your agreement and whether the options are exercisable.
If your options are available to be exercised, you'll see a box at the top of the page stating how many you can exercise.
Below is your agreement summary which outlines:
- Exercise price: how much you'll have to pay per share to exercise your options
- Exercise up until: the deadline by which you must exercise your options
- Tax liability on exercise: how much, if any, tax you'll have to pay per share once exercised
Enter how many options you wish to exercise and confirm you will pay the granting company the exercise price, then click Submit.
The company will receive your exercise request and process it once the exercise price has been paid.
Once complete, the exercised options will convert into real shares and your dashboard will be updated accordingly.
For platform admin users
When you receive an exercise request, you will need to take payment of the exercise price and confirm the completion of the exercise on Vestd.
An SH01 will be automatically generated and filed with Companies House, and a new share certificate will also be generated and sent to the relevant directors for signing. The company's cap table will be updated accordingly too.
In the case of EMI options, if the exercise price has been set below the AMV agreed with HMRC at the time of grant - and the shares cannot be immediately sold - both the company and recipient must sign an ITEPA 431 election to ensure no further income tax is liable. This will need to be completed off-platform.
Exercising options over a shareholder's shares
When options are granted over a shareholder’s shares, they’re currently held by someone else, so a stock transfer is required to exercise the options. And rather than the option holder paying the granting company the exercise price, they will pay the shareholder.
The other notable difference when exercising over a shareholder’s shares is that stamp duty is payable when the total exercise price is over £1,000. This must be paid by the option holder to HMRC, and the proof of stamp duty payment PDF must be uploaded to Vestd in order to complete the stock transfer.
When an exercise request comes in for options over a shareholder's shares, the Vestd platform will explain what you need to do at each step.
Our team, content and app can help you make informed decisions. However, any guidance and support should not be considered as 'legal, tax or financial advice.'