UK EMI License

• Tetra Consultants evaluates eligibility against 3 criteria: fewer than 250 employees, gross assets of less than £30 million, and qualifying trades. We highlight all of the UK EMI license requirements and will suggest how you can structure your business and trade to qualify for EMI. 

• We assist you in designing the rules of your EMI scheme – including types of share options, vesting schedules, option limits, employee eligibility, etc. Our team prepares the agreements and documentation required for your business, specifically designed for your business needs. 

• Tetra Consultants prepares and submits an advanced assurance application to His Majesty’s Revenue and Customs (HMRC), to confirm your company’s eligibility for EMI. This will involve gathering corporate paperwork, financials, and trading descriptions to support your application. 

• We will arrange for an HMRC-approved valuation to establish the market value of the shares under the EMI scheme, meaning employees will receive maximum value from their share options. 

• Once the valuation has been approved, Tetra Consultants will formalize the granting of EMI options to eligible employees. We will keep records and issue written option agreements within any timeframes set out in the regulations. 

• We register your EMI scheme and report options granted under the EMI scheme to HMRC as required prior to the July 6 deadline following the end of the tax year to retain tax-advantaged status. 

• Tetra Consultants provides ongoing compliance advice, support with the annual HMRC reporting, employee notifications, and managing scheme variations to continue to benefit from the EMI legislation. 

FCA application portal 

• To know how to get an EMI License in the UK from the FCA, our experts will let you know the whole procedure. Basically, it is done through their online portal called Connect System, which will lead you through every step of the application.  

• Firstly, the applicant must register on the Connect System to make an account and to access the application forms.  

• All documents and required materials must be uploaded through the portal. This includes the business plan, compliance policies, governance and oversight, and financial forecasts. 

• The portal also requires information about the company’s directors, key management personnel, and any qualifying shareholders (as well as some background checks). 

• As part of the submission process, the FCA requires a non-refundable application fee, paid online. 

• Once submitted, the FCA has an assessment process which involves potential outreach via the portal for clarifications or documents. 

• The typical review timeline through the Connect System is between 6 to 12 months depending on the completeness and complexity of the submissions. 

• It is also to be noted that it is the applicant’s responsibility to use the portal to inform FCA of any changes during the authorization process or after authorization is granted to remain in regulatory compliance. 

Documentation checklist 

• Company registration documents (Certificate of Incorporation) 

• Articles of Association and shareholder agreements 

• Board resolution approving the EMI scheme 

• EMI scheme rules document (share plan rules) 

• Employee eligibility and employment contracts 

• Notice of option grant (detailing shares granted, strike price, and vesting schedule) 

• Notice of option exercise (when employees convert options to shares) 

• HMRC advance assurance application and correspondence 

• Share valuation report approved by HMRC 

• PAYE reference number of the company 

• Corporation Tax Unique Taxpayer Reference (UTR) 

• Company Reference Number (CRN) from Companies House 

• Shareholder resolutions for share allotment or subdivision 

• Evidence of employee eligibility for EMI (e.g., working hours, UK tax residency) 

• Notifications submitted to HMRC for each option grant 

• Annual EMI scheme return to HMRC (including nil returns if applicable) 

UK FCA Compliance for EMI Requirements 

Anti-money laundering (AML) 

• Companies are required to do customer due diligence (CDD), ongoing monitoring, and report suspicious transactions to the FCA EMI license application and other authorities. Enhanced due diligence applies to higher-risk clients and transactions to help prevent money laundering and terrorist financing against the AML/CTF regulations specific to the UK. The companies’ AML programmes must include risk assessments, training for appropriately trained employees, and controls that are compliant with the Proceeds of Crime Act, and lastly, the Sanctions and Anti-Money Laundering Act. 

Safeguarding customer funds 

• Companies in the crypto space must segregate their clients’ assets from their own, maintain records, and ensure that client funds cannot be lost or misappropriated. Custody arrangements must be transparent and follow regulatory guidelines aimed at protecting investors. 

Regular reporting to the FCA 

• We will help you submit reports like financial returns, transaction monitoring, risk assessments, and material changes to your business, and any type of governance, regularly. SARs (suspicious activity reports) must be filed promptly. The Financial Conduct Authority (FCA) will conduct regular audits and compliance reviews. 

Risk and compliance frameworks 

• All companies should implement a risk management system that encompasses operational, financial, and compliance risks. To prevent fraud, market abuse, and systemic risks, strong internal controls, training staff, and embedding FCA safeguarding rules could help. Companies also need to have data protection provisions within GDPR compliance. 

What is the procedure for obtaining a UK EMI license?

The procedure to set up an electronic money institution may vary depending on the amendments taking place in the local laws and regulations. Tetra Consultants has summarized the most prevalent steps that take place during the normal engagement of attaining the EMI license.

• Tetra Consultants will advise you on the most appropriate form of entity and license for your business based on your projected business operation.

• Prior to the commencement of the engagement in the jurisdiction, our team of specialists will present you with the licensing requirements, including eligibility criteria, paid-up capital requirements, local economic substance requirements, timelines, and procedures.

• Tetra Consultants’ team of experts will make sure that every key managerial personnel engaged has the requisite qualifications and is competent enough to take the position, by verifying the informational data and supporting documents for the same.

• Tetra Consultants will perform due diligence on the company’s directors and shareholders. We will move to register the entity with the local Companies Registry after we have all KYC credentials, incorporation forms, and power of attorney.
• We will send the corporate documents, including the Certificate of Incorporation, Memorandum and Articles of Association, and other administrative documents, after the business has been properly registered.

• The legal experts at Tetra Consultants will draft the necessary documentation for the licensing application. Depending on the other local laws, these papers will contain the business plan, AML/CFT policy, and other necessary documents.
• Tetra Consultants will deliver you the draft of such documents after they have been prepared. Following that, we will email them to you for e-signature and start working on your license application.

• If the local regulator needs you to have economic substance, Tetra Consultants will assist you in meeting those requirements. Our staff will help with the recruitment of skilled local individuals to join the team.
• Tetra Consultants HR team will undertake the applicant shortlisting and initial interview. Following that, you may narrow down the final list of prospects to choose who is most suited to join the team. Tetra Consultants will assist with the preparation of an employment contract with the agreed terms and conditions once the candidate has been approved.
• In addition, our staff will compile a list of physical offices and deliver it to you. We will provide crucial factors such as monthly rental, location, size, and so on so you can better pick which is best for you. Tetra Consultants will draft the lease agreement to be signed between you and the landlord after the office has been selected.

• Once the above is completed, Tetra Consultants will submit the application to the local regulator. Depending on the jurisdictions, you may be required to attend an interview with the regulator prior to license approval. In this case, Tetra Consultants will prepare you for the interview and assist with the follow-up actions required by regulatory authorities.
• All going well, your firm will receive the UK EMI license and will be required to start business operations within the stipulated timeframe in order to maintain the license.

• To obtain an EMI license, you will need specialist banking facilities, such as client safeguarding accounts, and access to payment systems, such as IBAN and SWIFT. Furthermore, you will require systems and software to manage your business.
• Tetra Consultants Banking Team will help you by arranging banking facilities, such as safeguarding accounts, issuing cards, and access to payment infrastructures.

What is the timeline for obtaining a UK EMI license?

Application acceptance

• The FCA, the UK’s regulator, recognizes applications within 7 business days. The application is then allocated to a case officer, who evaluates the information presented and makes a decision.

Decision on an application

• The FCA takes a decision on the application within 3 months of receipt (assuming the FCA has all of the necessary information and documentation), or – 12 months (if the application is incomplete).

How long does it take to obtain a UK EMI license?

• Prior to the start of the engagement, Tetra Consultants will send you a project plan with the timelines stipulated for company registration, preparation of documents as well as UK EMI license application. This is to ensure that all parties are clear on the upcoming project.

EMI License UK Renewal and Ongoing Obligations 

Yearly reporting 

• Employers with an EMI scheme have to submit a yearly Employment Related Securities (ERS) return to HMRC detailing the share options they granted, exercised, or that lapsed during the tax year to keep HMRC informed and the tax reliefs current. 

Audited financials 

• Although EMI schemes do not require companies to have audited accounts, they should keep reasonable and up-to-date financial records (to justify valuations and satisfy HMRC), and audited financial records reinforce transparency to HMRC and integrity of compliance. 

Compliance review 

• Routine internal checks of the EMI scheme’s compliance with qualifying conditions are advisable to mitigate disqualification events, like changes in company status, employee eligibility or alterations in share capital. Professional assistance will help ensure the EMI scheme continues to obey qualifying conditions. 

FCA supervision 

• While EMI schemes are not regulated by the FCA, companies that provide financial services in conjunction with EMI-based incentives may be regulated by the FCA. As a result, firms need to ensure compliance with applicable regulations, governance standards, and need to inform the FCA of any material changes.

Suspension or Revocation of EMI License 

FCA enforcement actions 

• If the holder is found to be non-compliant with regulations, has lied on their application, or utilizes the license in furtherance of an illegal activity, the FCA may suspend or revoke an EMI license. Suspension is used while investigations are ongoing and is temporary – revocation is permanent and more profound. 

Non-compliance 

• The EMI license could be revoked if the firm repeatedly or seriously breaches FCA’s rules, fails to maintain governance or reporting standards, or fails to take remedial action after suspension. 

Capital breach 

• The EMI license could be revoked if the director of the firm, which is now subject to an FCA investigation or proceedings to revoke the license, continues to breach FCA’s rules, fails to maintain governance or reporting standards, or fails to take remedial action after the suspension. 

Customer fund mismanagement 

• Excessive handling or improper holding of customer funds, including the failure to segregate client assets or improper records, can result in serious regulatory consequences, including license suspension or revocation. 

Can the UK EMI license be revoked and canceled?

Yes, the regulatory authority that is FCA can revoke and cancel a firm’s authorization and registration in the form of a UK EMI license:

• If your entity no longer meets the minimum standards;
• If your entity can no longer fulfill its basic regulatory obligations, such as paying fees or submitting returns;
• If your entity can no longer meet its liabilities as they fall due, or where a firm fails to pay the amount due to a consumer under a final decision of the Financial Ombudsman Service (FOS).

Our services

• Tetra Consultants is an expert in attaining the payment license. we will consult on all aspects of e-money systems licensing and minimize the risks of permission dismissal. We will select an optimal form of the company and help to register a business in the UK, prepare all necessary policies and descriptions, and a business plan, prepare and verify the correctness of the documents package for the company, and shareholders, and provide support for the implementation of management requirements.
• In addition, Tetra Consultants can also assist with attaining other offshore financial licenses depending on your long-term business goals.

Find out more!

Contact us to find out more about how to get a UK EMI license. Our team of experts will revert within the next 24 hours.

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