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Employee Shareholder Agreement for Philippines

Employee Shareholder Agreement Template for Philippines

A comprehensive legal agreement governed by Philippine law that establishes the terms and conditions under which an employee becomes a shareholder in a company. This document outlines the rights, obligations, and restrictions associated with employee share ownership, including purchase terms, voting rights, dividend entitlements, transfer restrictions, and the relationship between employment status and shareholding. It incorporates relevant provisions from the Corporation Code of the Philippines, Labor Code, and Securities Regulation Code, ensuring compliance with local corporate governance requirements and employment regulations.

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What is a Employee Shareholder Agreement?

The Employee Shareholder Agreement is a crucial document used when companies in the Philippines wish to offer share ownership to their employees as part of their compensation, retention, or incentive strategy. This agreement is particularly important in the Philippine context, where employee share ownership must comply with both the Corporation Code and the Securities Regulation Code, while also adhering to local labor laws. The document typically combines elements of employment terms with shareholder rights and obligations, creating a comprehensive framework that governs the employee's dual role as both staff member and shareholder. It is commonly used in startups, growing companies, and established corporations looking to align employee interests with company success through share ownership.

What sections should be included in a Employee Shareholder Agreement?

1. Parties: Identification of the Company, the Employee Shareholder, and any other relevant parties

2. Background: Context of the agreement, including employment status and purpose of share issuance

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

4. Share Subscription: Details of shares being issued, including class, number, and price

5. Payment Terms: Terms and schedule for payment of shares, including any company financing arrangements

6. Employment Relationship: Key terms of employment and relationship with shareholder status

7. Rights and Obligations: Shareholder rights, voting rights, dividend rights, and corresponding obligations

8. Transfer Restrictions: Limitations on share transfers, including lock-up periods and right of first refusal

9. Termination Provisions: Consequences of employment termination on shareholding

10. Confidentiality: Provisions regarding company confidential information and trade secrets

11. Dispute Resolution: Process for resolving disputes, including jurisdiction and governing law

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

What sections are optional to include in a Employee Shareholder Agreement?

1. Tag-Along Rights: Rights of the employee to join in sale of shares by major shareholders - include for minority protection

2. Drag-Along Rights: Company's right to force employee participation in sale - include for exit flexibility

3. Share Vesting: Schedule and conditions for share vesting - include if shares are part of incentive package

4. Good Leaver/Bad Leaver: Different treatment of shares based on circumstances of employment termination

5. Non-Competition: Restrictions on competing activities - include if employee has senior role

6. Performance Targets: Link between company/individual performance and share rights - include for performance-based schemes

7. Share Valuation: Method for valuing shares - include if not publicly traded

8. Financing Provisions: Terms of company-provided financing for share purchase - include if relevant

What schedules should be included in a Employee Shareholder Agreement?

1. Share Certificate: Copy or details of the share certificate issued

2. Employment Terms: Summary of key employment terms relevant to shareholding

3. Company Constitution: Relevant excerpts from company's articles of incorporation and by-laws

4. Shareholders Agreement: Key provisions from main shareholders agreement affecting employee shareholders

5. Share Vesting Schedule: Detailed timeline and conditions for share vesting if applicable

6. Deed of Adherence: Form of deed binding employee to existing shareholders agreement

7. Transfer Notice: Form of notice for share transfers

8. Valuation Methodology: Detailed process for share valuation when required

Authors

Alex Denne

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

Jurisdiction

Philippines

Publisher

Ƶ

Document Type

Employment Contract

Cost

Free to use
Relevant legal definitions










Clauses








































Relevant Industries

Technology

Financial Services

Professional Services

Manufacturing

Retail

Healthcare

Real Estate

Telecommunications

Business Process Outsourcing

Energy

Construction

Mining

Agriculture

Education

Transportation and Logistics

Relevant Teams

Human Resources

Legal

Finance

Executive Management

Operations

Information Technology

Research and Development

Sales

Business Development

Product Development

Corporate Strategy

Administration

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Chief Operating Officer

Managing Director

Department Head

Senior Manager

Technical Lead

Senior Developer

Principal Engineer

Senior Consultant

Regional Manager

Country Manager

Division Head

Key Account Manager

Senior Sales Executive

Research Director

Senior Analyst

Project Manager

Product 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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