What the plan document covers
The plan is the umbrella document approved by the board and shareholders. It authorises the company to grant options out of a reserved option pool and fixes rules that every individual grant must follow, such as maximum vesting period, standard exercise window, and what counts as a good or bad leaver. Individual grants are then documented in a short grant agreement that references the plan and adds the specifics: how many options, at what strike price, and the vesting start date.
In the UK, an EMI plan must meet detailed qualifying conditions on company size, independence and trading activity, and each grant must be notified to HMRC within 92 days. A CSOP plan has its own separate rules and a higher individual limit per employee. In France, a BSPCE plan requires shareholder authorisation and is only available to companies meeting age and ownership thresholds. Each individual option grant then adds the specific strike price and vesting terms on top of these plan-level rules.
The option pool
The option pool is a block of shares set aside for future grants, expressed as a percentage of the fully diluted share count. It is usually created or topped up at each funding round, at the investor's request, and the dilution from the new pool is typically taken from existing shareholders before the new money comes in, following the option pool sizing conventions most investors expect.
| Stage | Typical pool size |
|---|---|
| Seed | 10 to 15% |
| Series A top-up | additional 2 to 5% |
| Later stage | refreshed as needed, often smaller top-ups |
Governance and approvals
- Board approval is required to adopt the plan and to approve each individual grant.
- Shareholder approval is often needed to authorise the pool size and any share issuance on exercise.
- Some jurisdictions require the plan or grants to be registered or notified to a tax authority to secure favourable treatment, such as EMI notifications in the UK.
- The plan should be reviewed by a lawyer familiar with the local regime before the first grant is made.
Missing a filing deadline, such as the UK's 92-day EMI notification window, can cost the employee the tax-advantaged treatment entirely.
Setting up a plan: what founders want to know
- Can a company run more than one option plan at once?
- Yes. Many UK companies run an EMI plan alongside a CSOP or unapproved plan for employees or non-employees who do not qualify for EMI.
- Who decides how big the option pool should be?
- The board and founders set the initial size, but investors in a priced round often negotiate the pool size and its dilutive effect as part of the term sheet.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.