This practice note considers the requirement that participating employees and/or their associates must not have a material interest in the company whose shares are used for company share option plans (CSOPs) and enterprise management incentives (EMI) options. It includes the special rules relating to employee benefit trusts and other discretionary trusts.

This note also considers the requirement that a shareholder who had a material interest in a company or its parent undertaking did not qualify for the income tax and capital gains tax reliefs associated with employee shareholder status. Tax relief for employee shareholder status was withdrawn in 2016.