Non Qualified Stock Option Agreement Template for Indonesia

A Non Qualified Stock Option Agreement is a legal contract that allows Indonesian companies to grant employees and consultants the right to purchase company shares at a predetermined price within a specific timeframe. Unlike qualified stock options, these arrangements do not receive preferential tax treatment under Indonesian tax law, but they offer greater flexibility in terms and conditions. You'll need this document to formalize equity-based compensation arrangements while ensuring compliance with Indonesia's complex regulatory environment governing securities and employment relationships.

When do you need this document?

You need this agreement when your Indonesian company wants to implement employee stock option plans as part of compensation packages or talent retention strategies. It's particularly useful for startups and growing companies seeking to attract skilled professionals without immediate cash outlays. The document becomes essential when engaging consultants or advisors who will receive equity compensation, or when establishing long-term incentive programs tied to company performance. You'll also require this agreement when your company undergoes restructuring or expansion phases where equity-based rewards help align employee interests with corporate objectives.

Key legal considerations

Your agreement must clearly define the exercise price, vesting schedule, and expiration terms to avoid future disputes. Pay particular attention to acceleration clauses that trigger upon termination, merger, or acquisition events, as these significantly impact both company obligations and recipient rights. Include specific provisions addressing what happens to unvested options upon employment termination, whether voluntary or involuntary. Consider anti-dilution protections and adjustment mechanisms for corporate actions like stock splits or dividends. The agreement should also address transfer restrictions, as Indonesian law generally prohibits assignment of personal employment benefits. Ensure compliance with foreign ownership limitations if option holders include non-Indonesian nationals, as this affects the percentage of shares that can be ultimately exercised.

Legal requirements in Indonesia

Under Company Law No. 40 of 2007, your company must obtain proper board resolutions and, where applicable, shareholder approvals before granting stock options. OJK Regulation No. 32/POJK.04/2015 requires public companies to follow specific procedures for capital increases related to option exercises. The agreement must comply with Employment Law No. 13 of 2003 regarding compensation arrangements and employee rights. Include provisions for Income Tax Law No. 36 of 2008 compliance, particularly regarding withholding obligations when options are exercised. Your document should address Capital Market Law No. 8 of 1995 requirements if your company falls under OJK jurisdiction. Ensure the agreement includes witness signatures as required under Indonesian contract law, and consider spousal consent requirements for married option holders to prevent future claims against the shares.