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Employee Shareholder Agreement

Employee Shareholder Agreement Template for Australia

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Key Requirements PROMPT example:

Employee Shareholder Agreement

"I need an Employee Shareholder Agreement for a tech startup in Sydney, offering 5% equity to our new CTO with a 4-year vesting schedule starting March 2025, including good/bad leaver provisions and tag-along rights."

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Document background
The Employee Shareholder Agreement is a crucial document for Australian companies implementing employee share schemes as part of their retention and incentivization strategy. This agreement is typically used when a company wants to offer shares to key employees or as part of a broader employee share ownership plan (ESOP). It outlines the complete relationship between the company and the employee as both a shareholder and staff member, ensuring compliance with the Corporations Act 2001 (Cth), Fair Work Act 2009 (Cth), and relevant tax legislation. The document includes essential information about share allocation, vesting schedules, transfer restrictions, and shareholder rights, while also addressing specific circumstances such as employment termination or company sale. It's particularly valuable for startups and growing companies in Australia looking to attract and retain talent through equity participation.
Suggested Sections

1. Parties: Identifies the company, the employee-shareholder, and any other relevant parties to the agreement

2. Background: Sets out the context of the agreement, including the employee's role and the purpose of share allocation

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Share Allocation: Details of shares to be issued/transferred, including class, number, and price

5. Payment Terms: Terms for payment of shares, including any loan arrangements or salary sacrifice provisions

6. Vesting Conditions: Specifies the vesting schedule and conditions for share ownership

7. Employment Relationship: Links between employment status and shareholding rights

8. Shareholder Rights: Voting rights, dividend rights, and other shareholder entitlements

9. Transfer Restrictions: Limitations on transfer of shares and process for permitted transfers

10. Compulsory Transfer Events: Circumstances requiring share transfer, including termination of employment

11. Valuation Mechanism: Method for determining share value for transfers or buybacks

12. Confidentiality: Obligations regarding company and agreement confidentiality

13. Dispute Resolution: Process for resolving disputes between parties

14. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law

Optional Sections

1. Tag-Along Rights: Rights of minority shareholders to join in sale of majority shareholding - include for minority shareholder protection

2. Drag-Along Rights: Rights of majority shareholders to force minorities to join in sale - include for exit flexibility

3. Good/Bad Leaver Provisions: Different treatment of shares based on circumstances of employment termination - include for more complex vesting structures

4. Share Buy-Back Arrangements: Detailed terms for company repurchase of shares - include if company wants right to buy back shares

5. Non-Competition Covenants: Restrictions on competing activities - include for senior employees or key personnel

6. Employee Loans: Terms of any loans provided to fund share purchase - include if company is financing share purchase

7. Tax Indemnities: Specific tax-related guarantees and indemnities - include if tax implications are complex

8. Performance Rights: Additional share rights based on performance metrics - include for performance-based equity schemes

Suggested Schedules

1. Share Certificate: Copy of share certificate or proof of shareholding

2. Deed of Adherence: Template deed for new shareholders to sign onto the agreement

3. Vesting Schedule: Detailed timeline and conditions for share vesting

4. Company Constitution: Copy or relevant excerpts of company constitution

5. Calculation of Fair Market Value: Detailed methodology for share valuation

6. Restricted Activities: Detailed list of restricted activities under non-compete provisions

7. Employee Share Scheme Rules: Complete rules of the employee share scheme

8. Tax Summary: Summary of tax implications and obligations

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
ASX
Bad Leaver
Board
Business
Business Day
Company
Company Group
Completion Date
Confidential Information
Constitution
Corporations Act
Director
Dispute
Employee
Employment Agreement
Encumbrance
Fair Market Value
Financial Year
Good Leaver
Grant Date
GST
Intellectual Property Rights
Issue Price
Key Performance Indicators
Listing Rules
Material Breach
Notice
Offer
Ordinary Shares
Party/Parties
Performance Conditions
Performance Rights
Permitted Transfer
Related Body Corporate
Relevant Interest
Resolution
Restricted Activities
Security Interest
Share Certificate
Shareholder
Shares
Share Trading Policy
Subsidiary
Tag-Along Notice
Tag-Along Right
Tax
Tax Act
Term
Termination Date
Transfer
Trigger Event
Trust Deed
Trustee
Valuation Date
Vesting Conditions
Vesting Date
Vesting Period
Vesting Schedule
Clauses
Share Issuance
Share Price and Payment
Vesting Conditions
Share Rights and Restrictions
Voting Rights
Dividend Rights
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Pre-emptive Rights
Share Valuation
Good Leaver Provisions
Bad Leaver Provisions
Employment Conditions
Performance Requirements
Confidentiality
Intellectual Property
Non-Competition
Non-Solicitation
Information Rights
Board Representation
Share Certificates
Company Constitution Compliance
Tax Obligations
Employee Loans
Security Interests
Share Buy-Back
Termination Events
Death or Incapacity
Dispute Resolution
Governing Law
Notices
Amendment
Assignment
Severability
Entire Agreement
Costs and Expenses
Force Majeure
Execution
Counterparts
Relevant Industries

Technology

Professional Services

Financial Services

Healthcare

Manufacturing

Retail

Mining and Resources

Construction

Media and Entertainment

Telecommunications

Biotechnology

Education

Real Estate

Energy

Relevant Teams

Legal

Human Resources

Finance

Executive Leadership

Operations

Information Technology

Research and Development

Sales

Product Development

Engineering

Corporate Development

Administration

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Chief Operating Officer

Managing Director

Senior Manager

Department Head

Technical Lead

Senior Developer

Senior Engineer

Senior Consultant

Key Account Manager

Project Manager

Research Lead

Product Manager

Sales Director

Operations Manager

Senior Analyst

Principal Scientist

Department Manager

Industries
Corporations Act 2001 (Cth): Primary legislation governing corporations in Australia, including share issuance, shareholder rights, and corporate governance requirements
Fair Work Act 2009 (Cth): Establishes minimum employment standards and protections that must be considered when structuring employee share schemes
Income Tax Assessment Act 1997 (Cth): Contains provisions relating to the taxation of employee share schemes and associated benefits
Tax Administration Act 1953 (Cth): Governs the administration of tax matters, including reporting requirements for employee share schemes
Privacy Act 1988 (Cth): Regulates the handling of personal information in employment records and shareholder information
ASIC Regulatory Guide 49: Provides guidance on employee share schemes and disclosure requirements
Competition and Consumer Act 2010 (Cth): Contains provisions that may affect restrictive clauses in shareholder agreements
State Security Laws: Various state-based legislation that may affect the transfer and registration of securities
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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