ESOP Agreement Template for Indonesia

The ESOP Agreement serves as the foundational document for companies in Indonesia seeking to implement an employee share ownership program. This document is typically used when companies want to align employee interests with corporate success, attract top talent, and create long-term incentives for staff retention. The agreement comprehensively outlines the structure and operation of the ESOP, including share allocation, vesting conditions, exercise procedures, and rights and obligations of all parties involved. It must comply with Indonesian regulations, particularly the Company Law (Law No. 40 of 2007), Employment Law (Law No. 13 of 2003), and relevant OJK regulations for public companies. The ESOP Agreement is essential for both private and public companies in Indonesia implementing employee share schemes, providing legal certainty and clear guidelines for all stakeholders.

1. Parties: Identification of the company and the plan administrator/trustee

2. Background: Context of the ESOP establishment, company's objectives, and authorization by relevant corporate bodies

3. Definitions: Comprehensive definitions of terms used throughout the agreement, including Option, Exercise Price, Vesting Period, etc.

4. Plan Administration: Designation of plan administrator and their powers, responsibilities, and decision-making authority

5. Eligibility and Participation: Criteria for employee participation, selection process, and conditions for maintaining eligibility

6. Option Grant Terms: Terms and conditions of option grants, including number of shares, exercise price determination, and grant documentation

7. Vesting Provisions: Vesting schedule, conditions for vesting, and treatment of unvested options

8. Exercise of Options: Procedures for exercising options, payment methods, and share issuance process

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

10. Transfer Restrictions: Limitations on transfer of options and shares, lock-up periods, and right of first refusal

11. Tax Obligations: Tax responsibilities of participants and company, withholding requirements

12. Amendment and Termination: Process for modifying the plan and circumstances for plan termination

13. Governing Law and Dispute Resolution: Application of Indonesian law and dispute resolution procedures