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Employee Share Option Agreement

Employee Share Option Agreement Template for India

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Key Requirements PROMPT example:

Employee Share Option Agreement

"Need an Employee Share Option Agreement for our Series B-funded SaaS startup in Bangalore, covering 50 key employees with a 4-year vesting schedule starting March 2025, including special provisions for remote workers and international transfers."

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Document background
The Employee Share Option Agreement is a fundamental document used by Indian companies to implement employee stock ownership programs. It is particularly relevant for companies seeking to attract and retain talent by offering equity-based compensation. The agreement must comply with various Indian regulations, including the Companies Act 2013, SEBI regulations (for listed companies), and relevant tax laws. This document is typically used when a company has established an ESOP scheme and needs to formalize individual grant arrangements with employees. It contains crucial information about option grants, vesting conditions, exercise procedures, and restrictions on transfer, while ensuring alignment with Indian regulatory requirements and market practices. The agreement is especially important for startups and growing companies looking to incentivize key employees through equity participation.
Suggested Sections

1. Parties: Identifies the company granting the options and the employee receiving them

2. Background: Sets out the context of the agreement, including reference to any ESOP scheme and shareholder approvals

3. Definitions: Defines key terms used throughout the agreement including 'Option', 'Exercise Price', 'Vesting Date', etc.

4. Grant of Options: Details of the options being granted, including number of shares, exercise price, and grant date

5. Vesting Schedule: Specifies when and how the options will vest, including any performance conditions

6. Exercise of Options: Procedures and conditions for exercising options, including payment methods and timing

7. Taxation: Addresses tax implications and responsibilities of both parties

8. Restrictions on Transfer: Limitations on transferring or encumbering the options or resulting shares

9. Termination of Employment: Treatment of options upon various types of employment termination

10. Confidentiality: Obligations regarding confidential information related to the options and company

11. Governing Law and Jurisdiction: Specifies Indian law as governing law and relevant jurisdiction for disputes

Optional Sections

1. Change of Control: Provisions dealing with corporate restructuring or acquisition scenarios - include for companies anticipating such events

2. Foreign Exchange Compliance: Required if the company has foreign investment or if shares might be transferred overseas

3. Lock-in Period: Include if there are restrictions on selling shares after exercise

4. Clawback Provisions: Include if company wants right to recoup benefits in cases of misconduct or restatement

5. Electronic Communications: Include if option grants and exercises will be managed through electronic system

6. Market Standoff Agreement: Include for companies planning IPO or public listing

7. Shareholders' Agreement Compliance: Include if existing shareholders' agreement affects option holders

Suggested Schedules

1. Schedule 1 - Option Certificate: Formal certificate detailing the specific grant including number of options and exercise price

2. Schedule 2 - Vesting Schedule: Detailed breakdown of vesting dates and conditions

3. Schedule 3 - Exercise Notice: Template form for exercising options

4. Schedule 4 - Company ESOP Scheme: Copy or summary of the company's ESOP scheme rules

5. Schedule 5 - Regulatory Compliance Checklist: List of compliance requirements under Indian law

6. Appendix A - Tax Implications Summary: Detailed overview of tax treatment of options at grant, exercise, and sale

7. Appendix B - Shareholders' Rights: Summary of rights attached to shares post-exercise

Authors

Alex Denne

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

alex.den.21@genieai.co
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Relevant Industries

Technology

Financial Services

E-commerce

Manufacturing

Professional Services

Healthcare

Education

Retail

Telecommunications

Software Development

Consulting

Startups

Relevant Teams

Legal

Human Resources

Finance

Compliance

Corporate Secretarial

Board of Directors

Senior Management

Operations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Human Resources Director

Legal Counsel

Company Secretary

Finance Manager

HR Manager

Compliance Officer

Senior Software Engineer

Product Manager

Department Head

Senior Manager

Vice President

Director

Technical Lead

Project Manager

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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