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Earned Equity Agreement Template for India

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Key Requirements PROMPT example:

Earned Equity Agreement

"I need an Earned Equity Agreement for our India-based startup's new CTO, offering 5% equity vesting over 4 years with a one-year cliff, starting January 2025, including specific performance milestones related to product development and team growth."

Document background
The Earned Equity Agreement is a sophisticated legal instrument used by Indian companies to align key stakeholders' interests with company performance and growth objectives. This agreement type is particularly relevant in the Indian business context where companies seek to attract and retain top talent while complying with strict regulatory requirements. The document establishes a structured framework for equity compensation, detailing how shares are earned over time or through achievement of specific milestones. It addresses key aspects required under Indian law, including Companies Act compliance, SEBI regulations, and tax implications. The agreement is commonly used for senior executives, key employees, or strategic consultants, providing them with the opportunity to become shareholders while protecting the company's interests through carefully structured vesting conditions and performance criteria.
Suggested Sections

1. Parties: Identification of the Company and the Equity Recipient with complete details as required under Indian law

2. Background: Context of the agreement, relationship between parties, and purpose of the equity arrangement

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Equity Grant Details: Specifics of the equity being offered including number of shares, class of shares, and face value

5. Vesting Schedule: Detailed timeline and conditions for equity vesting, including milestones if applicable

6. Performance Criteria: Specific metrics or goals that must be met to earn the equity

7. Rights and Restrictions: Share rights, voting rights, transfer restrictions, and other limitations on the earned equity

8. Tax Implications: Overview of tax obligations and responsibilities for both parties

9. Termination Provisions: Consequences of employment termination or breach on unvested and vested equity

10. Representations and Warranties: Standard declarations by both parties regarding capacity and authority

11. Confidentiality: Provisions for maintaining confidentiality of agreement terms and company information

12. Governing Law and Jurisdiction: Specification of Indian law application and jurisdiction for disputes

13. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

Optional Sections

1. Tag-Along Rights: Optional section for rights to join in sale of shares by major shareholders, relevant for significant equity stakes

2. Drag-Along Rights: Optional section requiring equity recipient to join in sale of company, relevant for significant equity stakes

3. Board Seat Provisions: Optional section for rights to board representation, relevant for senior executive agreements

4. Non-Compete Provisions: Optional restrictions on competitive activities, relevant for senior positions

5. Dispute Resolution: Optional detailed arbitration or mediation procedures, recommended for high-value agreements

6. Foreign Exchange Compliance: Required only if equity recipient is a foreign national or NRI

Suggested Schedules

1. Schedule 1 - Vesting Schedule: Detailed breakdown of vesting dates, percentages, and milestones

2. Schedule 2 - Performance Metrics: Detailed description of performance criteria and measurement methods

3. Schedule 3 - Share Details: Specific details of share class, rights, and restrictions

4. Schedule 4 - Compliance Checklist: List of regulatory requirements and necessary filings under Indian law

5. Appendix A - Shareholders' Agreement: Reference to or extract of relevant provisions from the company's shareholders' agreement

6. Appendix B - Board Resolution: Copy of board resolution approving the equity grant

7. Appendix C - Valuation Report: Independent valuation report for share pricing (if required by law)

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions







































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Relevant Industries

Technology

Professional Services

Financial Services

E-commerce

Manufacturing

Healthcare

Education Technology

Consulting

Software Development

Biotechnology

Real Estate

Retail

Media and Entertainment

Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Board of Directors

Corporate Secretarial

Compliance

Operations

Engineering

Product Development

Sales

Marketing

Business Development

Research and Development

Relevant Roles

Chief Executive Officer

Chief Technology Officer

Chief Financial Officer

Chief Operating Officer

Senior Vice President

Vice President

Director of Engineering

Director of Products

Senior Software Engineer

Principal Architect

Head of Sales

Head of Marketing

Senior Business Development Manager

Managing Director

General Manager

Senior Consultant

Principal Designer

Department Head

Project Director

Research Head

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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