LLPs and EMI

Generally, for a company limited by shares to be eligible for an EMI option scheme it must not be a subsidiary of or controlled by another company. There is, however, an exception to this - when the holding company is a limited liability partnership (an “LLP”) as an LLP is treated as a partnership and not a body corporate for tax purposes. As a result, a company that is controlled by an LLP can in many circumstances grant EMI share options. In some circumstances an LLP can be taxed as a company (generally this applied to passive investment LLPs) and in such circumstances a company controlled by such an LLP would not be able to grant EMI share options.

Where an LLP is treated as a partnership it is considered to be transparent for tax purposes with each member of the LLP being treated as having a fractional interest in the company owned by the LLP. It is only when this transparency is lost that the LLP is seen as owning the shares as a body corporate. In practical terms, shares owned by an active LLP are treated as if owned by individual members of the LLP and therefore the company invested in remains eligible for the purpose of granting EMI share options. 


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