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PISCES: updating your EMI agreements

Your guide to adding a PISCES exercise clause to existing EMI agreement

Last updated: 04/09/2025

TL;DR: EMI options granted before 6 April 2028 can be updated to allow exercise at PISCES trading events without losing their tax advantages. The update means adding a lawyer-drafted PISCES clause to each agreement, recording board minutes that approve its incorporation, and getting written agreement from (or giving written notice to) each option holder to inform them that their agreement has been amended to allow for PISCES trading events. This guide walks you through each step and what to watch out for.

PISCES gives your team a way to sell shares at regulated trading events without waiting for a full exit. But before option holders can exercise at a PISCES event, your existing EMI agreements need a specific update. This guide explains what that update involves, in plain terms; what you'll need to do, and what happens once it's done.

Contents📋

 

A few terms you'll see

These come up throughout the guide, so we've explained them once here:

  • PISCES trading event: a scheduled window, run under FCA rules, where shares in a private company can be bought and sold.
  • Specified exercise event: an event written into the option terms that allows the option to be exercised. HMRC requires PISCES to be one of these — a general board discretion clause doesn't count.
  • Deed of amendment: the legal document that adds the PISCES clause to an existing agreement, signed by the company and the option holder.
  • Board minutes: the written record of your board approving the incorporation of the PISCES clause into the named agreements.

 

Check which options qualify

The new rules (Finance Act 2026) apply to EMI options granted before 6 April 2028. These can be updated on or after 15 May 2025 without losing their tax advantages — the PISCES clause is treated as if it had been in the agreement from the day the option was granted.

For options granted on or after 6 April 2028, PISCES rights must be included at grant instead. Adding them later would be treated as the grant of a new option, and the tax advantages would be lost.

 

Get the PISCES clause drafted

The PISCES clause must be added to each EMI agreement by your lawyer. HMRC is strict about how this is done:

  • PISCES must be written into the option terms as a specific exercise event. A board discretion clause isn't enough, even if your agreements already give the board discretion to permit exercise.
  • The clause's only effect must be to permit exercise if the shares are (or become) PISCES shares, with the shares sold on PISCES as soon as reasonably practicable after exercise.
  • No other changes can be bundled into the same update — not even the minimum price or trading size for other exercise events.
  • Performance conditions can be attached to the PISCES clause, and vesting of non time-based options can be accelerated on a PISCES exercise, but only if your existing option terms already allow it.

 

Approve it with board minutes

Your board approves the incorporation of the PISCES clause into the named EMI agreements, recorded in signed board minutes.

What you'll need to do

  • Hold a board meeting (or pass a written resolution) approving the incorporation of the clause.
  • Keep the signed minutes with your statutory records — HMRC or a future buyer may ask to see them.

One thing to note: the minutes approve the change, but they don't make it. The clause still needs to be added to each agreement (next step).

 

Update agreements and notify option holders

Each option holder must be made aware of the change, in one of two ways:

  • Written agreement — the option holder countersigns a deed of amendment. We recommend this route; where no payment is given for the change, it should be made by deed.
  • Written notice — you notify the option holder of the change in writing. This route is only available if the option terms permit it.

 

What happens after the update

  • The PISCES clause is treated as if it had been in the agreement from the day of grant, so tax advantages stay intact — provided all EMI rules and the legislative requirements are met.
  • ERS reporting to HMRC carries on as normal; option exercises must still be reported.
  • A compliant fair market valuation is still needed for exercises and trades at a PISCES event.

 

Need help?

If you're not sure whether your agreements can be updated, your legal team can ask HMRC directly through its non-statutory clearance procedure. This guide isn't legal or tax advice — always check with your advisers if you're unsure.

 

FAQs

Can we use our existing board discretion clause instead of amending?
No. HMRC has confirmed that a board discretion to permit exercise can't be used for a PISCES trading event. PISCES must be written into the option terms as a specific exercise event.

Will updating the agreement affect the tax advantages?
No. If the update meets the legislative requirements, HMRC won't treat it as a change to the option's fundamental terms or the grant of a new right, so tax advantages stay intact.

Can we make other changes to the agreement at the same time?
No. The update's only effect must be adding the PISCES exercise right. Bundling in other changes — even small ones — could put the tax advantages at risk. Make any other changes separately, with advice.

Do option holders have to agree to the change?
Each option holder must either agree in writing (usually by countersigning a deed of amendment) or, if the option terms permit it, be notified of the change in writing.

What does "sold as soon as reasonably practicable" mean?
It depends on the circumstances, but HMRC has confirmed that if it's known the shares will be sold under a PISCES trading arrangement and the sale then completes, the requirement is met.

What about options granted on or after 6 April 2028?
Include PISCES as an exercise event at grant. It won't be possible to add it afterwards without losing the tax advantages.

Does this change our ERS reporting?
No. Reporting to HMRC continues as normal, and there's no change to the EMI templates.

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