This will depend on a number of factors including the person you are awarding equity to and your commercial goals but, generally, a sensible starting point for small, early-stage UK companies is to grant EMI options to qualifying employees (assuming the company can grant EMIs which must be confirmed first), non-tax favoured options to non-employees, non-EMI qualifying employees and direct issues of shares to founders. This gives the company flexibility to grant equity awards to all of its service providers (and potentially on a very tax efficient basis for EMI recipients) whilst avoiding the administrative overheads associated with issuing shares to a large number of individuals upfront. Generally, founders should receive direct issues of shares where possible (and ideally early on in the company’s lifecycle to minimise the valuation of the shares at acquisition) in order to give them the immediate benefits of the shareholding.
Learn More: UK Founder Series: Incentivise Your Team